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ESSAYS 



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I N 



Political Economy 



DEDICATED TO 

CARDINAL OIBBONS 

BY PERMISSION. 



By MICHAEL CORCORAN, Omaha, Neb. 



single: copies, 26c. 



ESSAYS 



IN 



Political Economy 



DEDICATED TO 

CARDINAL GIBBONS, 

BY PERMISSION. 






MICHAEL CORCORAN, OMAHA, NEB. 
^V^^^ ^ 



1893 

BUKKLEY PRINTING COMPANY 
OMAHA, NEB. 



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Copyright, 180:-!, by Michael Corcoran, Omaha, Nebraska. 



TO HIS EMINENCE 

JAMES CARDINAL GIBBONS, D. D., 

ARCHBISHOP OF BALTIMORE, 

CI?c5e (Essays are Respectfully Debicdteb, 

Because the Public have long recognized His Eminence as the 

Foremost Champion of the Rights op Labor, without any 

disparagement to his noble brethren in the 

American Hierarchy, or to his brethren 

IN the Hierarchy throughout 

the whole Universe. 

38b tU Sluttor, 

MICHAEL CORCORAN. 



I accept with thanks vQur kind proposal to dedicate your worlv in 
Political Economy to me. May God reward you for your efforts in 
behalf of the laboring classes. 

[Signed], J. CARD. GIBBONS. 

To Michael Corcoran, Esq. 



' 'Never do we perform an act more God-like than 
when we bring sunshine to hearts that are dark and deso- 
late. Never are we more hke to God than when we cause 
the flowers of joy and of gladness to bloom in souls that 
were dry and barren before . . . . or, to borrow the 
words of the pagan Cicero: 'There is no way by which 
men can approach nearer to the gods than by contributing 
to the welfare of their fellow-creatures.' " 

[These are the concluding words delivered bj' His Eminence 
Cardinal Gibbons at the Congress of Religions, during the World's 
Fair, at Chicago, September, 1893.] 



"Mr. Corcoran quotes from Prof. Sumner's History of 
American Currency, and winds up a very pleasant article 
by saying, 'I will prove that Sumner is wrong.' Just as 
soon as he has verified this last promise Mr. Corcoran will 
have established himself as an economic writer of the 
greatest research and utmost vigor." 

[Signed], J. Sterling Morton. 

[See letter from Mr. Morton in the Sunday "World-Herald. Omaha. 
June .5th, 1892.] 



PRELIMINARY. 



If the English Economists had no Divine Message for 
the severe and outspoken Carlyle, it need not be a matter 
for surprise if Americans can see no message for them- 
selves in those writings. 

Mr. Carlyle wrote in his "Latter-Day Pamphlets": 
" Respectable Professors : I have pretty well seized what 
of Divine Message you were sent with to me. Perhaps as 
small a message, give me leave to say, as ever there was 
so much noise made about before." 

Mr. William G. Sumner, Professor of Political and 
Social Science in Yale College, in his ' ' History of American 
Currency," on page 248, writes: "The report of this 
committee (British Bullion Report of 18 10) is perhaps the 
most important document in financial literature. Its doc- 
trines have been tested both ways, by disbelief and by 
belief, by experiment of their opposites and by experiment 
of themselves. They are no longer disputable. They are 
not matter of opinion or theory, but of demonstration. 
The}' are ratified and established as the basis of finance. 
They may be denied, as the roundness of the earth was 
denied even five years ago, and as Newton's theory of the 
solar system was denied until twenty-five years ago, but 
they have passed the stage when the scientific financier is 
bound to discuss them." 

This is truly crushing. But, without being able to 
see what the " roundess of the earth" or "Newton's 
theory" have to do with the subject, let me say, demurely, 
e pur si TThuove, nevertheless the earth does move, never- 
theless the British Bullion Report ought not to be accepted 
as "the basis of finance," even though, in point of fact, it 
has been accepted. However, Prof. Sumner deserves 
respectful consideration for his straightforward and definite 
proposition ; because so much of our current literature is 
disfigured by a strained affectation of artistic non-commit- 
talism. Professor Sumner gives his opponents something 



ESSAYS IN POLITICAL ECONOMY. 



to grapple with. Adam Smith did not call his work 
"Political Economy," he called it "The Wealth of Na- 
tions." Mr. Fawcett held that "Political Economy is 
concerned with the principles which regulate the production, 
the distribution, and the exchange of wealth.^' 

It would appear that a study concerned only with 
wealth is only a science of wealth at best. John Stuart 
Mill is concerned, as he says, with the same subject and 
"that subject is wealth." But then he enlarges (on page 
13, Prin. Pol. Econ.) and says "Their investigation be- 
longs not to physical, but to moral and social science, and 
is the object of Political Economy." 

Jevons has a theory of Pleasure and Pain. Bastiat, 
unconsciously infected, has a theory of Harmonies. And 
so on with the list. And it is to be observed that after 
one hundred years they do not yet know what they mean 
by the fundamental terms of what they call a science. 

What does all this suggest .' It suggests a groping in 
the dark. It is one of the indications of the stupor pro- 
duced by so-called modern science which excludes God. 
Men do not seem able to give a straight answer ' 'Yes" or ' 'No" 
to the question — are we here or not; are we on our heads 
or heels ; have we free will or not ; are we bees, or bats, 
or beavers, or monkeys, or men, or denizens of the moon .' 
In fact, they do not know their own minds and what they 
want. We are men, endowed with reason and free will. 
By our nature, we are not only capable of, but compelled 
to, choose and direct our own course, and to make our 
own environments. What ought we to do ; and Will we 
not do what we ought to do } That is the question. By 
virtue of the right which the American constitution gives 
to every citizen, I want to write some essays in aid of the 
production of the temporal well-being of the United States 
of which I am a loyal citizen ; and I desire that good for 
all Nations. 

MICHAEL CORCORAN. 



804 North Twenty-Third Street, 
Omaha, Neb. 



THE SCOPE OF POLITICAL ECONOMY. 



In many respects, one of the most satisfactory works 
on Political Economy, is the volume by Mr. Chas. S. 
Devas, examiner in political economy at the Royal Uni- 
versity of Ireland. 

It is one of the " Stonyhurst Series." As may be 
expected, therefore, it is a work which belongs to that 
growing Ethical School which seems already assured of a 
complete mastery over its rivals — the Abstract, the Social- 
ist, and the Historical. The declaration, by the learned 
Mr. Devas, contained in his preface, is unmistakable and 
uncompromising. And, furthermore, it is noteworthy, 
because of the learned men whose assistance tie acknowl- 
edges. After expressing his thanks to "the Rev. Michael 
Maher of the Society of Jesus," he says: "I wish also to 
acknowledge my obligations to the writings of two German 
Fathers of the same Society, namely to Father Julius 
Costa-Rosetti's ' Grundlagen der Nationalokonomie' for 
the intricate matters of value and price ; and to Father 
Theodore Meyer's ' Jus Naturae ' for the history of general 
ethics on which the history of economics rests, and without 
which it would be unintelligible." 

Now in another volume of the Stonyhurst series 
" Logic — by Richard F. Clarke, S.J.," we read on page 3 : 
"The connection between correct thought and correct 
language is so intimate, that any branch of knowledge 
which treats of the one must to some extent include the 
other." Again, on page 14, we read: "It is true to say 
that we cannot think a thought without logic having a 



8 ESSAYS IN POLITICAL ECONOMY. 



control over it;" and, further, on page 194, he says: 
"One of the most fruitful sources of human error is a 
misty, indistinct apprehension of the meaning of the terms 
we use." 

This "fruitful source of error" has been pointed out, 
most forcibly, by Cardinal Gibbons, Cardinal Newman, by 
Professor Fawcett and many other leading economists. 

But the evil is not remedied. Not only do we not 
find agreement in the "meaning of the terms we use," but 
we do not find agreement as to whether the "science" of 
political economy is a science at all or not. In Webster's 
Dictionary we find that the word " Economy" signifies the 
system by which anything is managed. And the word 
"Politics" relates to government. 

Now, even here the word "economy" is ambiguous. 
There is the economy of nature, which we may observe, 
but which we can not interfere with ; we know it would be 
futile for us to say that it ought to be otherwise. 

Here, we must nip the quibble in the bud — to change 
the course of a stream is not to interfere with the economy 
of nature. The water still follows the economy of nature. 
We may boil the water, we may evaporate it, we may 
freeze it. The water still follows the economy of nature. 

But in the economy of human society we must inter- 
fere, we Tnust say that it ought to be otherwise, we Tnust 
regulate it with our free will for the economy of human 
society cannot work, for good or for ill, without our free 
will. 

Therefore, to study the economy of human society as 
we study the economy of a bee hive, or the habits of ants, 
or the life of plants, would be absurd. The Rev. Richard 
Clarke, S. J., clearl)^ explains the distinction between 
Science and Art. He says : "The end of Science may be 
practical, but it is never productive, or rather, as soon as 
it aims at production it passes into an art." In the study 



ESSAYS IN POLITICAL ECONOMY. 



of political economy, we aim at production, and at noth- 
ing else. 

We have not to study political econom)^, as we study 
and examine the animalculae in water, saying "how 
funny !" and " how wonderful !" and there is the end of it. 
Men are not animalculae in water. This is what we have 
to study : How can we produce benefit to the society in 
which we live .-' 

We have to consider questions of justice, and justice 
must hold sway in all things, and justice belongs to the 
science of morals. We have to consider public works- — 
such as roads, bridges, canals, harbors — but these belong, 
in part, to the science of engineering. We have to con- 
sider agriculture, but that is a science in itself. We have 
to consider the widest possible extension of the ownership 
of land ; naval and military defense ; banking, currency, 
taxation, trade and commerce ; but here are a variety of 
questions. We have to consider transportation, and how 
a greater or less facility of transportation affects the 
general well-being. 

In fine we have not to call for the advice of the 
masters in one science only. We have to apply the col- 
lective knowledge of all the sciences, which can be made 
available, for the temporal well-being of society, subject, 
of course, as reason demands, to the Science of Sciences — 
the knowledge of the revealed will of God. 

Such is the aim of our study — to jn^oduce the well- 
leing of society. But a study "as soon as it aims at pro- 
duction, it passes into an art." 

We have not to study one science only. We have 
not to put in practice one science only ; we have to put in 
practice many sciences. Thus we need the aid of many 
scientists. 

Mr. Devas says: "Political Economy is the name 
commonly given in England to economic science, one of 



lO ESSAYS IN POLITICAL ECONOMY. 

the moral, or ethical sciences which have as their subject 
matter the free actions of men." 

Now, while we admit that "the free actions of men" 
form the "subject matter" of Political Economy, it is not 
evident to us that it should be called a moral or ethical 
science, instead of saying that it is partly, not exclusively, 
an ethical science. For instance, morals do not enter into 
the abstract consideration of value, using the term as 
synonymous with market price, when we are simply exam- 
ining the evidence, with a view of ascertaining what 
causes produce, or are likely to produce, a change in 
value or market price, e. g. the purchase of Suez Canal 
shares by the English Government ; or the construction of 
a canal by the American Government, to connect the 
Pacific and Atlantic Oceans. 

But changes in the market price greatly influence the 
free actions of men. Morals do not enter into the sciences 
of chemistry, botany, geology, mineralogy, civil engineer- 
ing, electricity, astronomy, mechanics, or mathematics. 
Yet, these and other things greatly influence the free 
actions of men. 

Mr. Devas says, truly, on page 537 of his "Political 
Economy": "Much has been written on the scope and 
method of Political Economy, that is, on the position of 
economic science among the other sciences, and on the 
logical procedure by which the conclusions of this science 
are to be reached. But, though much has been written, 
no agreement has been come to ; a misfortune due princi- 
pally to two causes. The Jirst is the want of agreement 
on the meaning of words and the subsequent misunder- 
standings which never could have arisen had there been a 
recognized philosophical vocabulary. But the second 
reason for disagreement is much graver than a mere mis- 
understanding, being nothing less than a fundamental 
divergence on the first principles of ethics." Yes, indeed. 



ESSAYS IN POLITICAL ECONOMY. I I 

And hence we see that men who clearly perceive and 
denounce, on ethical grounds, the unjust proposals of 
Socialists who would rob the rich through legislation, 
nevertheless, do not perceive or denounce the unjust pro- 
posals of the rich who would rob the poor, indirectly, 
through legislation. 

God has declared for all time that "oppression of the 
poor and defrauding the laborer of his hire are sins which 
cry to heaven for vengeance." Has there never been 
legislation which had for effect, and was so intended, to 
oppress the poor and to defraud the laborer of his hire ? 
We all know that there has been such legislation. Fur- 
thermore, but for unjust legislation there would be no social 
question. There would be no upheaving of the masses. 
Yes, indeed, alas, "the fundamental divergence on the 
first principles of ethics" has caused the rich to prevent 
justice being done to the masses through legislation. 
What are the masses upheaving against ? A myth ? Not 
at all. They are uprising against the oppression of unjust 
laws. It is because Christianity does not rule that we have 
unjust laws. 

Yes ! let us speak plainly, for the crisis is momentous, 
the sins of a perverse and adulterous generation have so 
deadened all sense of justice in the rich, that the whole 
world, at this moment, groans beneath an intolerable 
oppression. Behold the yoke which has been exchanged 
for the reasonable rule of the church which Christ estab- 
lished on earth ! 

Who can deny it t Listen ! Our Holy Father Pope 
Leo Xni, in his Encyclical Letter on "The Condition of 
Labor" says : "The momentous seriousness of the present 
state of things just now fills every mind with painful 
apprehension ; wise men discuss it ; practical men propose 
schemes ; popular meetings, legislatures, and sovereign 



12 ESSAYS IN POLITICAL ECONOMY. 

princes, all are occupied with it — and there is nothing 
which has a deeper hold on public attention." 

But that is not enough, for Pope Leo says, again : 
"But all agree, and there can be no question whatever, 
that some remedy must be found, and quickly found, for 
the misery and wretchedness which press so heavily at 
this moment on a large majority of the very poor," and 
again, ''public institutions and the laws have repudiated 
the ancient religion.'' 

And once more Pope Leo says : "It cannot, however, 
be doubted that to attain the purpose of which we treat, 
not only the Church, but all human means must conspire. 
All who are concerned in the matter must be of one mind 
and must act together. It is in this as in the Providence 
which governs the world ; results do not happen save 
where all the causes co-operate." 

Again : "At this moment the condition of the work- 
ing population is the question of the hour ; and nothing 
can he of higher interest to all classes of the state than that 
it should be rightly and reasonably decided^ 

In another passage Pope Leo writes : " The first duty 
therefore, of the rulers oi the State, should be to make 
sure that the laws and institutions, the general character 
and administration of the commonwealth, shall be such as 
to produce of themselves public well-being and private 
prosperity. This is the proper office of wise statesmanship 
and the work of the heads of the State. Now a State 
chiefly prospers and flourishes by morality, by well-regu- 
lated family life, by respect for religion SLud justice, by the 
moderation and equal distribution of the public burdens, 
by the progress of the arts and of trade, by the abundant 
yield of the land — by everything which makes the citizens 
better and happier. Here, then, it is in the power of a 
ruler to benefit every order of the state, and amongst the 
rest to promote in the highest degree the interests of the 



ESSAYS IN POLITICAL ECONOMY. 1 3 

poor ; and this by virtue of his office, and without being 
exposed to any suspicion of undue interference — for it is 
the jprovince of the commonwealth to consult for the 
common good. And the more that is done for the working 
population by the general laws of the country, the less 
need will there be to seek for particular means to relieve 
them. There is another and a deeper consideration which 
must not be lost sight of. To the State the interests of 
all are equal, whether high or low. The poor are members 
of the national cbmmunity equally with the rich ; they are 
real component parts, living parts, which make up, 
through the family, the living body ; and it need hardly 
be said that they are by far the majority. It would be 
irrational to neglect one portion of the citizens and to 
favor another ; and therefore the public administration 
must duly and solicitously provide for the welfare and the 
comfort of the working people, or else that law of justice 
will be violated which ordains that each shall have his due." 

Now the first point we will note is that these most 
momentous words are in direct and irrevocable opposition 
to laissez faire, which is the cardinal principle of the 
current English Political Economy. 

The Encyclical, then, may be considered as a grasp- 
ing, by a master mind, of the whole subject of Political 
Economy. 

The Rev. Richard F. Clarke, in his "Logic," on page 
19, very happily marks the distinction between Science 
and Art, for speaking of the Science of Medicine he says : 
"But it is not an art until the practical science is put into 
practice with a view of producing certain definite results 
hitherto non-existent, of producing strength where before 
there was weakness, health where before there was 
disease." 

Summing up the argument, it seems justifiable to say 
that Political Economy would be more philosophically 



14 ESSAYS IN POLITICAL ECONOMY. 

defined as an art — the art of practically applying all the 
sciences, in the government of human society, with the 
view of producing improved health in the body politic, or 
in other words, with a view of producing temporal pros- 
perity and happiness. 



II. 

VALUE. 



Since we saw at the very beginning of our study that 
"One of the most fruitful sources of human error is a 
misty, indistinct apprehension of the meaning of the terms 
we use," let us consider the meaning which would be the 
most philosophical, to adopt in Political Economy, for the 
word ''value,.'' 

It is true that to write clearly, we must think clearly. 
And to interchange ideas, with satisfactory results, we 
must have a clear agreement as to the meaning of our 
words. 

Let us try to bring about that agreement. We put 
the matter in this way, advisedly. 

For words are conventional, or are used by common 
consent, as signs to represent our ideas. 

Of course, in this, as in everything else, we ought to 
be reasonable, for we are rational beings. 

We leave it, very cheerfully, to the philologists to 
say what was the meaning of a given word, at a particular 
period in the past, or in a particular country in times past. 

We are concerned in the question — what ought to be 
the meaning agreed upon, in order to be philosophical 
and consistent throughout. 

Mr. Senior, in his appendix to Whately's "Logic," 
has well written "As value is the only relation with which 
Political Economy is conversant, we might expect all 
economists to be agreed as to its meaning. There is no 
subject as to which they are less agreed." 



1 6 ESSAYS IN POLITICAL ECONOMY. 

Professor Fawcett, M. P., says: "Value is a relative 
expression and implies comparison." In his "Manual of 
Political Economy," page 315, he says: "Many of the 
most widespread errors arise from confusing the words 
value and price." Perhaps it would be more true to say 
that the errors arise from not discarding the word value 
and rising the word price instead. On page 316 he says: 
"Price is a particular kind of value." Again, on page 
349, he says : "The investigation of a subject which must 
always be complicated is rendered more difficult by speak- 
ing of the value of a commodity instead of its price ; the 
public almost invariably speak of the price of a commodity, 
and seldom consider its value by directly estimating the 
quantity of every other commodity for which it will 
exchange." 

Mr. Devas writes, on page 209, of his "Political 
Economy": "Surrounded with these pitfalls, let the 
student ever keep in mind as his safeguard the following 
brief proposition : (a) That the only measure of value is 
price, (b) That if we seek precision, we should speak of 
prices not of values." With this we cordially agree. 

Professor Jevons prides himself on having discarded 
the term value altogether, and using the term "ratio of 
exchange instead." 

John Stuart Mill, in his "Principles of Political 
Economy," Book III, page 265, says: "The word value, 
when used without adjunct, always means, in Political 
Economy, value in exchange ; or as it has been called by 
Adam Smith and his successors, exchangeable value, a 
phrase which no amount of authority that can be quoted 
lor it can make other than bad English. Mr. De Quincey 
substitutes the term Exchange Value which is unexcep- 
tionable." 

But "exchange value" and "ratio of exchange," when 
precisely expressed are nothing else than the market price. 



ESSAYS IN POLITICAL ECONOMY. 1/ 

Furthermore, Mill says, on page 297: "It is unfor- 
tunate that in the very outset of the subject we have to 
clear from our path a formidable ambiguity of language. 
The value of money is to appearance an expression as 
precise, as free from possibility of misunderstanding, as 
any in science. The value of a thing is what it will 
exchange for ; the value of money is what money will 
exchange for." 

Henri Ceornuschi, in his evidence before the United 
States Monetary Commission, February, 1887, says, page 
7 : "I will give you my definition of money: Money is a 
value created by law to be a scale of valuation and a valid 
tender for payments." 

Then he says: "This fact, that money is a value 
created by law, is one of great importance, and I can cite 
you the highest authorities in proof that what I say is true. 
Mr. Chairman, the doctrine that money is a value created 
by law was promulgated twenty-two centuries ago. It 
was advanced by Aristotle, the great philosopher — so 
practical and so positive that I would dare call him an 
American philosopher. I quote from his writings : ' Money 
[nornisma in Greek) by itself is but a frivolity, a futility, 
a trifle, and has value only by law [nomas in Greek), and 
not by nature : so that a change of convention between 
those who use it is sufficient to deprive it of all its value 
and power to satisfy all our wants (Politica). In virtue of 
a voluntary convention, money {7iomisma) has become the 
medium of exchange. We say 'nomisma' because it is 
not so by nature, but by law 'nomos,' and because it is in 
our power to change it and render it useless (Ethica).' " 

Now let us give this some careful study. We have to 
consider the definition of money given by M. Cernuschi, 
and the doctrine of Aristotle. 

For what purpose do we read Aristotle } Is it, 
simply, that we may commit to memory the teachings of 



1 8 ESSAYS IN POLITICAL ECONOMY. 

Aristotle, as if he were divine, and that we may assent to 
all his doctrines: or is it that we may strictly analyze, in 
order to see how much is true, and how much is error : 
and then, that we may retain the true and discard the 
error ? Surely, we must analyze, for we are not devoid of 
reason, and his words are not divine revelation. Now 
M. Cernuschi says "money is a value created by law." 
Aristotle says "Money has value only by law." These 
two statements are essentially different. It is one thing 
to say money is ; quite another to say money has. The 
statement of Aristotle is questionable. The statement of 
Cernuschi is absurd. The effect would be very ludicrous, 
if Cernuschi were to say he is a hat, instead of saying he 
has a hat. Now, as to the doctrine of Aristotle, much 
defect is visible in it. Thus: " money is a futility" and 
"has value only by law." But money, qua money, does 
not come into existence except by law. Therefore money 
by itself can never be a futility : for a thing cannot both 
be and not be at one and the same time. Money cannot 
be a thing which has value, and a futility, at one and the 
same time. Money is not a natural thing. Money is a 
legal thing — a legal instrument. The instrument is made, 
and has been made, in the world's history, of more than 
one material. 

Then Aristotle says: "Has value onlt/ by law." 
What is value ? Value is an effect. Is law exclusiyely 
the cause ? Let us see. Since value is an effect, let us 
ask what kind of an effect ? It is an effect produced in the 
mind, a vague, relative estimate of things. It takes 
definite and exact, outward, concrete, form in the propor- 
tionate exchange of things, or, to use precise and therefore 
the most scientific terms, in market price. 

Let us ask what is the proximate cause of concrete 
value or market price ? The proximate cause of value or 
market price, is the offer of something accompanied 
• 



ESSAYS IN POLITICAL ECONOMY. 1 9 

by the request or demand for that thing which before 
had no value or market price. That request or demand 
is called now the "effective demand," a clear and use- 
ful term. Thus "effective demand" is the proximate 
cause of value. Trace this back. What is the cause 
of the "effective demand.^" We see at once that de- 
sire — desire to possess — is the cause. What causes this 
desire .'' Admiration of the thing desired. What causes 
this admiration ? A perception of the qualities of the 
thing" and of the uses to which those can put it who admire 
and desire it. Then an offer of something is made for the 
thing desired, and value, which before did not exist, now 
comes into being. We have come to the last analysis. 
The first cause of value is the perception of the qualities 
of the thing and of its usefulness. The proximate cause 
of value is the "effective demand." This thing may have 
been created by God, in the order of nature, or it may 
have been made by man artificially. In either case it is 
effectively demanded by men because they perceive that 
they can put it to use. In order to make a thing have 
value, the law must make a thing which men will desire 
and effectively demand for the uses to which they can put 
that thing. 

Now money is a legal thing, a legal instrument made 
bylaw. Has it "value only by law.'" Manifestly not. 
It has, manifestly, its value, partly by law and partly by 
effective demand. The maker and the demander partly 
cause the effect^ — value or market price. But can we say, 
even now, that we have seen all the causes, the "only" 
causes of value ? Let us continue to investigate and to 
analyze. The thing made by law may be of different 
materials. It is clear that money made of some materials 
can draw forth effective demand only for the use of it as 
money. Money of other materials may have value also 
because of the material, which men can put to other uses. 



ESSAYS IN POLITICAL ECONOMY. 



This much is certain : that no money can pass which 
is not esteemed, admired and eagerly desired. No govern- 
ment can overcome the absence of those requisites. 

Every child knows that goods cannot be sold if no 
one wants them. No trader will retain in his store goods 
which no one wants. 

Now value does not come into being by nature. The 
value of a thing does not begin to be, until some one 
wants or desires that thing. But that is not enough. 
Some one must offer something for it, before that thing 
can hegin to have value. Needless to say the thing offered 
must be desired. 

Now when a government makes and issues money, no 
matter of what material the money may be made, it can 
not begin to have value until some one offers a valuable 
thing for that money. Thus it is plainly not true to say 
that money " has value only by law." Money has value 
partly by law, partly by effective demand, partly by sub- 
causes affecting the supply and the demand. 

Times may change, place may change, and men 
may find that the use to which they can put the inferior 
material far exceeds the use to which they can put the 
superior material ; and thus they may come forward with 
a far greater effective demand for the money made of the 
so-called inferior material. Thus the material previously 
called inferior might come to have the greater value. 
Again the material may be produced with greater or less 
labor, with greater or less expenditure of other material, 
in greater or less abundance. The supply might be 
' increased or decreased, absolutely, or relatively. Those who 
make the effective demand might bid against each other, 
endeavoring to obtain possession. Some men might hoard 
the thing desired, whether money or some natural com- 
modity, such as wheat. The law might make a thing in 
such foolish abundance as to destroy its usefulness. That 



ESSAYS IN POLITICAL ECONOMY. 21 

would tend to destroy the value either entirely or in part. 
There was one year that nature produced such an 
abundant supply of herrings in Dublin Bay that they were 
looked upon with contempt, trampled on and used as 
manure. The effective demand was not sufficient to give 
them much value or much market price, although the 
great supply was just as nutritious in quality as any 
previous small supply. They were perishable goods and 
could not be used quickly enough. 

Thus we see there are many factors partly creating 
value, partly increasing value, partly lessening or tending 
to destroy value, and we can not at all assent to the prop- 
osition of Aristotle that "money has value only by law." 
It is too sweeping. Money [qua money) has existence only 
by law. 

Now when Aristotle says "so that a change of con- 
vention between those who use it (money) is sufficient to 
deprive it of all its value," we must note that the term 
"convention" is ambiguous. It may mean unwritten con- 
vention or custom; or it may mean legal or written 
convention. If a legal convention we have seen that the 
proposition is not tenable. If change in the unwritten 
convention, or custom, follow the change in the legal 
convention then it is perfectly clear — manifest to the 
dullest intelligence — that the thing which has been sub- 
jected to that change cannot retain any value. A thing 
can have no value if no one gives anything for it. 

A thing can have no value when no one uses it. 
Again a thing can have no value — water or air for instance 
— as long as men can have it without making an effective 
demand for it, without* having to offer anything in exchange 
for it. 

From this point of view we are led to consider what 
some men say as to value. They say that cost of produc- 
tion determines value; that labor causes or creates value. 



ESSAYS IN POLITICAL ECONOMY. 



Now value did not exist from the beginning. That is 
manifest. When men fed, clothed, and sheltered them- 
selves with the product of their own labor, directly, there 
was no value in the world. Not until the first exchanges 
took place, not until the first man offered some of the 
product of his labor to his neighbor and asked or demanded 
effectively that his neighbor would give him some of the 
product of his labor, not until then did value begin to be. 

Thus labor did not create value. The effective de- 
mand meeting with limited supply owned by another 
created value. Then men began to labor and to collect 
commodities, in order to secure other commodities in ex- 
change, as well as for the purpose for which they labored 
previously. 

Then there came a time when gold and silver were 
first discovered. We may assume that when examined 
they were admired for such of their qualities as were then 
perceived. When the first finder, as we may also assume, 
showed his gold and silver to his neighbor, the neighbor 
admired them and perhaps asked for some. But that was 
not enough. He then made an effective demand for some 
of the gold and silver, he offered a horse, we will say, or 
some other goods. The exchange was made and then for 
the first time the value of gold and silver was created. 

The exchange of horse for cow was barter. The 
exchange of corn, for horse, cow, and sheep, was barter. 
Then the exchange of horse for gold and silver was still, 
essentially, barter. 

In the lapse of time the gold and silver came to be 
coined, stamped, and called "money" by law. 

Then money was exchanged fer horse. It was still, 
essentially, barter. Commodities were bartered, directly, 
for money, and money for commodities. 

Now when this gold and silver came to be coined, 
stamped, and called money by law, it had value previously 
created. 



ESSAYS IN POLITICAL ECONOMY. 23 

The law, alone, did not create the value. The law 
did not create the value at all. The law increased the 
value. It might, perhaps, be said that the law created 
the new or increased value. But, granting that the law 
thus created part of the total value, still, it can not be 
truly said that "money has value only by law." 

Then when men labored to obtain some good which 
had value or market price the labor was not the cause or 
creator of value, on the contrary, the value or market price 
was the cause of labor. Value was the banner with the 
strange device "Excelsior," beckoning the toiler, and 
alluring him on and on, and urging him to ascend to 
greater and still greater heights. The value or market 
price of labor is the jprize, thenceforward, for which men 
strive and toil and waste away, by unceasing strain, their 
fragile frames. 

The horses which enter the enclosure for the race do 
not cause the prize to come into existence, but the prize 
causes the owners of the horses to enter them for the race. 
Or, if we must be very strict, the prospect of a prize causes 
the owners of the horses to enter them. 

But it may, perhaps, be true to say that labor and 
cost of production which are themselves the effect of value, 
being caused or brought into being by value, in turn be- 
come the cause of new value. Labor may become more 
skillful, or cost of production may be increased for im- 
proved implements or machinery, and the product may 
secure a higher value. 

Again that > combination may multiply the product so 
as to lessen the value of the product and yet labor may 
secure the same reward as before. 

From all this we cannot possibly say that labor is the 
sole creator of value. 

Whether this is, or is not, a fact, it is. a truth to be 
ascertained by the light of human reason alone, and 



24 ESSAYS IN POLITICAL ECONOMY. 

depends upon its own proper evidence. The most that 
can be said, on the evidence we have, is that labor and the 
cost of production have both a share in causing some new 
value. But to recognize this truth, and to endeavor to 
think accurately, does not in any way obscure the moral 
truth that labor should obtain a just share of the prize for 
which it contended. 

We may, however, safely assent,* it seems to me, to 
this proposition : That prospective value or market price 
is the chief cause of, or inducement for, all production. 

There are some men who say, with a sickly smile, 
that the value of gold never changes, is invariable. But 
by "value" they mean not the value but quality of bright- 
ness, or of yellowness, or of malleability, or of indestruct- 
ibility, or all these qualities combined. But "value" is a 
word which does not express the intrinsic qualities of 
anything. It expresses a relation between things. And the 
relation between things, in Economy, is their relative 
market price. 

Thus market price expresses the relationship between 
things, or between money and commodities. And "value" 
expresses the relationship between commodities. And as 
things which are equal to the same thing are equal to one 
another, and as market price and value both express, or 
are equal to, the same thing — the relationship between 
commodities and money — ^therefore, market price and 
value are equal to one another. 

Thus the value of bread is not its nutritous qualities, 
or its constituent elements, or the use which is made of it 
by man, to sustain life, but its value is its market price. 
And so, also, with water, its value, where such exists, is its 
market price. Where there is no market price for water, 
there, water has no value. 

Again if "value" is a vague term, and it is admitted 
to be vague, indeed, it is manifestly vague and ambiguous. 



ESSAYS IN POLITICAL ECONOMY. 25 

then it is an unscientific term. For "scientific" means 
exactness, as opposed to vagueness — exact knowledge as 
opposed to vague knowledge. But "value" is vague: 
therefore, "value" is opposed to "scientific" as a term in 
Political Economy. 

Now, in close connection with our present argument, 
we may observe that: Everything which alters supply and 
demand tends to alter value: But the currency laws of 
the United States alter supply and demand: Therefore 
the currency laws of the United States alter or tend to 
alter value. 

A great mistake is often made by comparing the yard- 
stick, as a standard of length, with money as a standard 
of value. 

A standard is something held aloft before men for 
comparison. In the present day it is, here and now, 
something more. 

Nothing is recognized as a standard of length except a 
legal standard of length. 

Nothing is recognized as a standard of value except a 
legal standard of value. 

In both cases we have, so to speak, one thing for 
comparison. 

In length we have an abstract thing — three feet. 

In value we have a concrete thing — money. 

The abstract thing — length — is fixed, absolutely, by 
law, and never varies. 

The standard of value is fixed, as to essentials, legal, 
and one thing invariably held aloft, as a standard for com- 
parison of values. That one thing is money. 

Commodities are never compared to any thing else 
' except money, in order to ascertain their values. And 
they are compared to legal money, and to legal money 
exclusively. 



26 ESSAYS IN POLITICAL ECONOMY. 

In this sense then, that we have exclusively one thing, 
and always, and invariably, that one thing, money, in this 
sense we have 2. fixed standard of value. 

Nothing is recognized as money except legal money. 

Nothing is legal money except that which is full legal 
tender for all debts, both public and private. 

And currency, whether gold, silver or paper, which is 
not full legal tender for all debts public or private, is not 
only not money, but it is not even a true substitute for 
money. Currency, which is not full legal tender, is a 
demand for money and not money itself. 

As long as silver or paper must be redeemed in gold 
they are not money. Money is not redeemable. That 
which is redeemable is not money. The tender of money, 
and of money alone, is the redemption of debt. Debt can 
not be redeemed by any other means except by the tender 
of money. But money is not a natural thing. Money {qua 
money) is essentially and exclusively a legal thing. 

But, while we can have a fixed standard of value — 
money, we cannot have a fixed value of money, by law, or 
by any other means on earth. The idea is absurd, abso- 
lutely ridiculous. 

Value, as we have seen, expresses a relation between 
commodities, which relation is changing every hour in the 
day faster than the telegraph can announce the changes. 

And now, in view of all this, if we desire, and we 
ought to desire, and God knows we do desire, to extend, 
as widely as possible, private ownership of property in 
land, amongst the masses of the people, then we must 
issue bonds, we must borrow money. But we see, alas, 
that money is steadily and surely appreciating in value, 
and must continue to do so, as long as redemption in gold 
is insisted upon, by law, for any debt whatever. 



ESSAYS IN POLITICAL ECONOMY. 2/ 

It is criminal folly, or lunacy, to propose to borrow 
money, on long time, with a steadily appreciating currency. 
Thus the money question blocks the way. 

But our Most Holy Father Pope Leo XIII wrote in 
his '"'Encyclical Letter on the Condition of Labor," in 
regard to property in land as follows: "On the other side 
there is the needy and powerless multitude, sore and suf- 
fering, always ready for disturbance. If working people 
can be encouraged to look forward to obtaining a share in 
the land, the result will be that the gulf between vast 
wealth and deep poverty will be bridged over, and the 
two orders brought nearer together. Another consequence 
will be the greater abundance of the fruits of the earth. 
Men will always work harder and more readily when they 
work on that which is their own; nay, they learn to love 
the very soil which yields in response to the labor of their 
hands, not only food to eat, but an abundance of the good 
things for themselves and those that are dear to them. 
It is evident how such a spirit of willing labor would add 
to the produce of the earth and to the wealth of the com- 
munity. And a third advantage would arise from this: 
men would cling to the country in which they were born; 
for no one would exchange his country for a foreign land 
if his own afforded him the means of living a tolerable and 
happy life. These three important benefits, however, can 
only be expected on the condition that a man's means be 
not drained and exhausted by excessive taxation. The 
right to possess private property is from nature, not from 
man; and the state has only the right to regulate its use 
in the interests of the public good, but by no means to 
abolish it altogether. The state is therefore unjust and 
cruel, if, in the name of taxation, it deprives the private 
owner of more than is just." 

If then it be unjust to tax the holder of land to the 
"full rental value," as the single-tax men propose, and to 



2 8 ESSAYS IN POLITICAL ECONOMY. 

tax directly, by law, so that all men can at least see at a 
glance how much tax has been imposed; is it not unjust to 
tax the holder of land, indirectly by law, to the half, or 
more, of the capital value of his land and goods, unper- 
ceived by the laboring masses, through currency laws 
which cause a steady appreciation of money? Then what 
injustice to all tax-payers? What injustice to those who 
have mortgaged their land on long time? What injustice 
to those who would wish to buy land on long time? What 
injustice to those states, cities, and counties, who would 
wish to borrow money on long time for improvements or 
for schools? And all this done by legislation, willfully and 
deliberately, adverted to with full knowledge, before the 
whole world, as to what would be the effects of such legis- 
lation. 

And yet there are not wanting those who say that the 
money question is not a moral question, but a business 
question. 

What? Is justice not a moral question? What is a 
moral question? Tell us, oh! ye scribes and pharisees, ye 
whited sepulchres, and ye "shylocks" of the Protestant, 
Catholic and Jewish persuasions!!! Let no man single out 
the Jews; there are worse "shylocks" amongst professing 
Christians than ever were known in Venice or in Israel. 

We know with absolute certainty that "oppression of 
the poor and defrauding the laborer of his hire" are sins 
especially cursed by God and that those sins cry to heaven 
for vengeance, and we know that those sins can be and 
have been committed through unjust legislation, and we 
see with our own eyes, now, at this moment, that the 
whole world groans beneath the most unbearable oppres- 
sion it has ever known, like a curse of God, through unjust 
money laws, and yet we are told that the money question 
is not a moral question but a business question. 



ESSAYS IN POLITICAL ECONOMY. 29 

Scribes and Pharisees! Ye are quick enough to tell 
us that the legislation proposed by socialists and commun- 
ists to take away property from the rich is a very, very 
much moral question. But to tax and to take away prop- 
erty from the poor and from the laboring classes, unjustly, 
is only a business question! 

But it cannot be said that the poor and the laboring 
men alone suffer from such unjust money laws. Manufac- 
turers, merchants and traders, generally, cannot afford to 
have their profits filched from them by laws which appre- 
ciate the <:urrency; for they find that they have to give 
more goods than they had counted upon giving in order to 
obtain the money which they must get to meet their 
engagements. Prices fall, necessarily, when money is 
appreciated. The prices must continue to fall as long as 
gold monometallism is continued. 

In the year 1859 Mr. Richard Cobden translated a 
work by Chevalier on "The Probable Fall in the Value of 
Gold." The fall in the value of gold, caused by the 
increased supply of gold! That meant a rise in the value 
of goods! 

This was well noted and widely discussed. All 
adverted to the fact. Mr. Cobden adverted to it and 
published it. Professor Fawcett, M. P., also adverted to it, 
and Mr. Giffen has adverted to it in his "Essays in 
Finance." 

The American law of 1834 changed the ratio of silver 
from 1:15 to 1:16. The effect of that, and the effect of 
the change from the Spanish ratio of 1497, and from the 
English ratio of i 560, was to counteract the effect of the 
increased supply of money metal given by a beneficent 
providence in the course of nature. Was the effect of 
that legislation unknown to the beneficiaries of those 



30 ESSAYS IN POLITICAL ECONOMY. 

I refuse to believe in such simplicity, and in such a 
plea of gross ignorance. I refuse to believe that simplicity 
and ignorance passed the laws of 1834, 1873 and 1890. 
It can not be that all were in simple ignorance. 

To show public advertence, I may extract from the 
evidence of M. Cernuschi in 1877 as follows: " In con- 
nection with this subject of the relative value of gold and 
silver, I would call the attention of the committee to the 
edict of Medina, which is frequently referred to in treatises 
on money, issued by Isabella of Spain in the year 1497. 
The legal ratio between gold and silver coins was then 
established by Isabella and her advisers as one to ten and 
three-quarters. Some years prior to that the ratio had 
been different; it had been one to eleven and three- 
quarters." 

Then he says: "Your law of 1834, raising the value 
of gold as against silver from 1:15 to 1:16, was enacted 
precisely with the aim of inviting the importation of gold, 
. . . This difference in the cost of mintage gave certainly 
more preference to gold against silver." 

Liars who lie by evasion will pretend even now not to 
see the point herein involved. The effect was an appre- 
ciation of gold, or a tendency that way, and a tendency to 
depreciation of the value of silver, and the law was 
"enacted precisely with the aim." 

Some of the beneficiaries of iniquity dare to say — for 
they glory in their shame — that they want an "honest 
dollar." What mockery, from such lips! They are, at 
this very moment, flagrantly engaged in procuring a most 
dishonest dollar, because an appreciated dollar, and well 
they know it. The working masses of the people have 
never yet had honest money laws. There is certainly no 
prospect of it from modern infidelity. Providentially the 
supply of silver was increased to benefit the people. It 
made their burdens easier to bear. The increase of the 



ESSAYS IN POLITICAL ECONOMY. 3 1 

ratio absorbed the increased supply, and counteracted the 
natural tendency to a fall in the value of money, which 
would have made it easier to procure, to pay debts. Was 
that counteraction done in simple innocence and ignorance.' 
Let simple folks believe it. The increase of ratio having 
proved so very successful, the mask was thrown off, and 
demonetization — wholesale demonetization — set in. The 
steal of the sneak thieves was no longer in fashion, we 
have the gigantic sxoindle much preferred. 

What a gang of wretched criminals! Their crime is 
essentially the same as the crime of the socialists, but is 
greater in degree of infamy, it steals from the poor. 

In the face of the outrageous swindle of the money 
laws the citizens ought to be continuously posted on the 
status of the question. Thus they may be able to judge; 
thus justice at last may be done. The truth should be 
made known to the people that gold monometalism is 
antagonistic to freedom of internal trade as well as to 
international trade. 

The gigantic restriction of monometalism, or the gold 
basis, and additional restriction of law which requires 
reserves of that restricted currency, is not free trade. 
Protection is begotten of the gold basis. But it may be 
said that England has free trade and a gold basis. I deny 
that England has real free trade, or near free trade. The 
horse is not free to go whither he listeth when you bind 
fast his jaws with bit and bridle and the reins are in the 
hands of a master. The English Bank Act of 1844 is 
antagonistic to the Free Trade Act of 1846. 

It may be said that Mr. Gladstone, and English 
statesmen of both parties, and bankers, financiers and 
politicians, do not consider the acts as being incompatible. 
They say trade moves freely to and from England. But I 
am forced, by conviction, to say that nevertheless it does 
not move freely. The law requires a reserve. The law 



32 ESSAYS IN POLITICAL ECONOMY. 



requires payment of Bank of England notes in gold by the 
bank. In order to carry out the law the bank raises its 
rate and the whole country is compelled, by force of cir- 
cumstances, to follow. Loans are suddenly called in and 
manufacturers, merchants, and traders, know well I speak 
truly when I say they are forced to sell at a sacrifice — as 
must be the case in all forced sales. All this is the effect 
of the Bank Act of 1844. 

But when the effect of carrying out a law, in any 
country, is to check imports and to force sale of exports 
then there is not free trade in that country. Whether it 
is done by a published legal prohibition, or by a published 
legal tariff, or by the secondary effects of a bank law, it is 
the same, in result, when imports are checked and exports 
are forced. 

But now, having pointed out that the money question 
stands right in the way of freedom of trade, blocks the 
way of tariff reform, as it does of every other reform, we 
must return to the subject of the financial steal, which 
brings us at once to the consideration of silver. 

Note what Cernuschi says in his evidence before the 
commission, at Washington, in 1877: "If you coin at the 
ratio of sixteen, France can not coin at the ratio of fifteen 
and one-half. Remember the experience of 1834. What 
has been the effect of the ratio sixteen then established.^ 
The effect has been that no silver dollars have been coined 
in the United States since 1834, because there was a profit 
of three per cent in sending silver to France." 

Now it is clear that the lower ratio (speaking in one 
popular sense), and the higher ratio as silver men might 
call it, are really the same thing. Thus fifteen and one- 
half is a lower number than sixteen, but it is a higher or 
more favorable ratio for silver. The less silver there is 
put in the coin, the more is silver honored. The people 
gain by less silver in the coin, in so far as payment of their 



ESSAYS IN POLITICAL ECONOMY. 33 

debts is made easier. The bond-holders gain by having 
more silver in the coin because it tends to reduce the 
amount of coin in circulation and to help appreciation. 
If the ratio were changed to fifteen and one-half, the stock 
of silver dollars we have would make more dollars, because 
a little would be taken out of each dollar and so make 
more dollars. But if the ratio were changed to twenty- 
five or thirty, as some propose, then four hundred millions 
of the present dollars would make only two hundred 
millions, and the silver coin in circulation would be reduced 
by one-half. 

It is no matter about the mine owners. So long as 
the people gained we would not object to the bond holders 
making a gain along with the people. So long as the 
people gain we do not object to the mine owners making a 
gain along with the people. 

And this is just exactly the argument of the high tariff 
men. They say: "So long as the people gain by high 
tariff what matter if the eastern monopolists gain also.'" 
Just so — what matter.? That would be all very sound 
reasoning if it were true that the people do gain. But the 
point is: that the people do not gain by high tariff. And 
that is why the tariff is unjust, in giving unjust gains to 
a few, while at the same time injuring the people. 

Now if France coin at fifteen and one-half, and all 
other countries at sixteen, or more, then France would be 
the most favorable market for silver, and all silver would 
go there. France might not like to be the only buyer of 
silver. And we have seen how she objected, and how she 
closed her mints. But if America joined France at the 
ratio of fifteen and one-half, then there would be two 
great markets well able to undertake the task. To raise 
the ratio by a change to fifteen and one-half — or in other 
words to change from our present ratio of sixteen, and to 
make the ratio fifteen and one-half; to put less silver in 



34 ESSAYS IN POLITICAL ECONOMY. 

the coin, to make our gold and silver coins in the propor- 
tion of fifteen and one-half ounces of silver to one ounce 
of gold, instead of the present proportion of sixteen ounces 
of silver to one ounce of gold; that would be a gain to 
America in thus joining France. Then the Latin Union 
would join, and Russia too, and the South American 
Republics; and they might easily include a treaty of 
" Reciprocity." 

But it is undeniable that if America were to issue 
bonds and offer them for silver, she could issue the bonds 
at a premium, instead of a discount as is the case with 
gold bonds. And the opportunity is now favorable for 
America and France to issue five hundred millions of 
dollars worth of bonds, for each nation, to carry out 
extensive public works; and the effect of such a sudden and 
large demand for silver would not only counteract the 
demonetization of silver by Germany in 1871, and by 
Austria in 1892, but, not improbably, would raise the ratio 
.to the old ratio of Isabella, which was eleven to one. 

Now let us not leave this question of the alterations in 
the value of money which have been caused by deliberate 
and arbitrary legislation. Let us see further. 

Mr. Giffen says, in "Essays on Finance," page 82: 
"It is not a mere increase of supply which tends to cause 
a fall of value, but an increase of supply in excess of the 
demand. And supply and demand themselves are not 
mere accidents. In the long run supply is ultimately 
dependent on real causes operating on producers and mer- 
chants, and the effective demand changes with every 
change of price." 

Now it is well to call attention here to an important 
point, not expressly referred to in this quotation, because 
the juxtaposition must impress the truth more firmly on 
the mind. 



ESSAYS IN POLITICAL ECONOMY. 35 

1. Governments can make "effective demand" for 
any commodity, when authorized to do so by law. 

2. Governments, in all ages, have made "effective 
demand" for many commodities. 

3. When any government makes an "effective de- 
mand," to a very great extent, for an immediate delivery 
or supply, of any commodity, such action causes an imme- 
diate increase in the value of that commodity. 

4. When several governments make that "effective 
demand" for any commodity, then, a fortiori, such action 
causes an immediate increase in the value of that com- 
modity. 

5. Now, conversely, when several governments sell 
any commodity, which has been stored in their hands, and 
sell it to an enormous extent, in the absence of any great 
desire to buy, or in the absence of any urgent "effective 
demand," such action must necessarily cause an immediate 
and a great decrease in the value of that commodity. 

Now, when gold was first coined, it was stamped with 
the mark of its then existing value, or market price in 
commodities, or its purchasing power. But for a govern- 
ment to coin metal is to provide a great central and certain 
market for the metal. It is, in effect, the nation buying 
the metal. This cannot be denied now, for the gold men 
themselves have long recognized the truth, saying: "Why 
should the nation buy sixty-cent dollars for the benefit of 
the silver states.^" In saying so they willfully pervert the 
meaning of the government action, but that does not alter 
the value of the admission — that, to coin is to buy. 

But to take them on their own ground, I ask what 
caused the silver in the dollar to be now worth only sixty 
cents.'' It was the dishonest laws of 1834, of 1873 and 
1890. It was the change of the ratio and the demonetiza- 
tion of silver in 1873, and the act of 1890, joined with and 
aggravating the swindles of European statesmen. That's all. 



36 ESSAYS IN POLITICAL ECONOMY. 

If then, the infamous swindles thus perpetrated were 
the cause of the fall in the value of silver, why should not 
the swindles be reversed? If the swindles caused the fall 
in the value of silver, to reverse the swindles would plainly 
raise the value of silver. Then, when the swindles were 
reversed we would no longer have a sixty-cent dollar. 

When gold was first coined it was, in effect, bought. 
That would have tended to raise the value of gold. But 
as barbarism decreased the desire for gold and gew-gaws 
would have decreased. That would have tended to check 
the rise in the value of gold. If gold had not been coined 
it would have been left to depend, for value, exclusively, 
on demand for its use in the fine arts. As the supply 
increased, and as the barbaric desire for gew-gaws de- 
creased, and as commerce became more secure from piracy 
and from raids, then the natural result would have been a 
steady decline in the value of gold. But the market 
created by government coinage changed all that natural 
working of the laws of supply and demand — a clear legisla- 
tive interference with the freedom of trade. 

Now we may take another interesting extract from 
Mr. Giffen's "Essays in Finance." He says, on page 93: 
"A depreciation of ten or fifteen percent in the measure of 
value spread over a quarter of a century is hardly of a kind 
to produce any social disruption. At the worst it is a ten 
per cent income tax, and though a ten per cent income tax 
would be all but intolerable when levied directly, experience 
has fully shown that a much heavier per centage can be 
levied on commodities indirectly without the victims beino- 
individually conscious of the process." 

Here, then, is a very strong suspicion of the suggestive 
"don't nail his ear to the pump," for the guidance of the 
monied classes. It is as if he said: "See! you are beino- 
taxed, indirectly, ten or fifteen per cent, on income, by the 
depreciation in the value of gold, caused by the natural 



ESSAYS IN POLITICAL ECONOMY. 37 

increase in the supply of gold. You can counteract it. 
You had better take steps. And, let me whisper, you can 
do more. You can turn things the other way. You can, 
slyly, reverse the engines of supply and demand by legisla- 
tion. Come nearer. Listen! You can appreciate gold, 
and levy a heavy tax, for your own benefit, on every com- 
munity, indirectly, (hush-sh) without the victims being 
individually conscious of the process. Now, take steps.'' 
And they did it. 

Read the result, in his essay on "The Fall of Prices 
of Commodities in Recent Years," page 332. And mark: 
he is a gold man! The leading gold man of the day! He 
says: "These three causes then — the extreme and pro- 
longed discredit, the bad harvests, and the extraordinary 
demands for gold — appear to me to have concurred in 
bringing prices of commodities to the lowest level which 
has been reached at any period for many years. That they 
would be sufficient to account for much of the effect which 
has been produced can hardly be disputed, and that they 
have existed is beyond all doubt.'' 

"The Probable Fall in the Value of Gold," a work 
well worthy of perusal, is that by Michel Chevalier, 
translated from the French, in 1859, by Richard Cobden, 
Esq. In his preface Mr. Cobden says: "M. Chevalier has 
qualified himself for the present task by a long and labor- 
ious study of the currency question, having given to the 
world some essays on money and the precious metals, 
which are recognized as standard works, and invest his 
name with an authority on such subjects, hardly second to 
that of Humbolt himself." 

In another passage Mr. Cobden writes: "Unless, 
however, the cardinal rule of commerce, that quantity 
governs price, which appHes infallibly to all other com- 
modities, loses its force when gold is concerned, this 



38 ESSAYS IN POLITICAL ECONOMY. 

sudden and great increase must be followed by a reduction 
of value." 

It follows, then, that any legislation which, directly 
or indirectly, increases or decreases the supply of gold, 
silver or paper money, must have for effect the deprecia- 
tion or the api)Teciation of money. 

An increase in the supply of money, whether by 
natural causes or by the deliberate act of the legislature, 
depreciates the value of money. A decrease in the supply 
of money or a relative decrease, whether by natural causes 
or by the deliberate act of the legislature, appreciates the 
value of money. 

Mr. Cobden says, in another place: "M. Chevalier 
draws the conclusion, from the facts of the case, that there 
must be a fall in the value of gold in consequence of its 
greatly increased quantity. In this view he will be sup- 
ported by all our great authorities on the currency, to 
whatever party they belong." 

The passage with which M. Chevalier concludes his 
work is well worthy of the gravest consideration. Speak- 
ing of two projects, (i) to demonetize silver, or (2) to 
remain with arms crossed and to leave things to take their 
own course, he says: "The demonetization of silver would 
then be an accomplished fact. At whatever point of view 
I place myself, whether I regard it as a question of interest, 
of equity, or of honor, I cannot perceive a great difference 
between the one and the other of these two processes. 
The effects would be the same, they would be equally 
disastrous, equally condemnable. On some future day, 
history, when its pen shall be held by judges firmly devoted 
to the cause oi j^'rinciple, such as was Tacitus for his time, 
will visit the one or the other of these projects with its 
severest condemnation. In many respects omission is 
almost as culpable as action. This is especially true in 
relation to that particular social force, the destination of 



ESSAYS IN POLITICAL ECONOMY. 39 

which is to show itself in action, and that force is called 
government. . . . Let the event then be taken for what 
it really is, a respite given to the authorities of France to 
enable them to act. It would be, perhaps, better to say that 
it is a pause on the part of the sole authority to which 
governments own themselves amenable, Divine Provi- 
dence, to enable every one to do his duty." 

It is with regret that I have to point out, what seems 
to me a confusion of thought, in such a work. M. 
Chevalier says on page 154: "The quality of standard 
implies immutability of value: it reveals itself only by this 
immutability, and the immutability in its turn implies the 
quality of standard." 

Now immutability, or absence of change of the thing 
used as a standard for comparison, is one thing. Immuta- 
bility in the value of the standard so chosen, is quite 
another. Immutability in the value of anything is almost 
unthinkable. 

On page 25 M. Chevalier says: "The price of a certain 
thing is its value in relation to a substance specially desig- 
nated, that is to say, to the material of which money is 
made. Thus, whilst in ordinary language we often con- 
found these two words, value and price, and use them as 
synonymous terms, they have in reality a distinct meaning. 
Both have a relative sense; but value is a more general 
and indeterminate expression, or to use a better word, 
more vague; price is more special, and has a meaning 
perfectly precise." Furthermore, a thing can have no 
value, no matter how precious, when we pay no price for it. 

Here the first proposition that the relation of com- 
modities is "to the material of which money is made" is 
strikingly contradicted by his own evidence. 

He points out that "from the first of January, 18 16, 
to the first of January, 1839, the excess of the importation 
of silver over the exportation amounted to 1,822,824,818 



40 ESSAYS IN POLITICAL ECONOMY. 

francs ($364,564,963). Nearly the same proportions were 
preserved until 185 1, inclusively; but then commenced an 
inverse movement which gathered strength every year." 

Then he says, page 61, that: "From the first of 
January, 1852, to the first of January, 1858, the total 
excess of exportations over importations amounted to 
1,127,000,000 ($225,400,000). There are not two ways, 
there is only one way of explaining these facts: gold is 
imported into France in masses, and takes the place in the 
circulation formerly filled by silver, which disappears, 
because it is profitable to come from abroad to barter gold 
for silver, on the footing of one kilogramme of the former 
for fifteen and-a-half of the latter. . . . The merchant 
possessing ingots of gold has only to carry them to the 
mint to obtain the same amount in pieces of ten francs or 
twenty francs, weight for weight, and fineness for fineness, 
save only a small charge to cover the expense of coining. 
In this way every kilogramme of gold introduced into 
France, enters into the circulation on the footing just 
described, of an equality with fifteen and one-half kilo- 
grammes of silver. The creditor is obliged to take it in 
discharge of his claim on that basis. . . . From the 
moment that numbers of persons devote their time and 
capital to the carrying out of this substitution, we must 
conclude that it is a profitable trade, for, if the relation of 
one to fifteen and one-half were not advantageous for the 
holders of gold, they would take good care not to carry on 
the operation upon the large scale on which they have 
proceeded. . . . Gold is no longer worth fifteen and one- 
half times its weight of the other metal . . . the bullion 
merchants will pay to those who bring, them a certain 
quantity of coined silver, a certain sum beyond its legal 
equivalent in gold money, and the amount of the premium 
is the measure of the change which the relation of one to 
fifteen and one half has undergone. This premium is a 



ESSAYS IN POLITICAL ECONOMY. 4I 

notorious fact; it is quoted every day/ every morning the 
newspapers announce it. Sometimes it has been lower, 
but it has also risen to forty francs. Twenty, thirty or 
forty per one thousand is two, three or four per cent. . . . 
The fact of gold having heen appreciated in France two 
per cent, or even less, is a sufficient reason why it should 
be precipated upon the market of that country; on the 
contrary let silver be depreciated to the same extent, and 
it will flow away with equal impetuousity." 

This lengthy extract has been given in order to be 
free from the charge of garbled extracts. 

Now it is absolutely conclusive that he is wrong in 
saying, on page 25: "The price of a certain thing is its 
value in relation to a substance specially designated, that 
is to say, to the material of which money is made." He 
has shown conclusively that the price of a thing is its rela- 
tion to money, and not to the material of which money is 
made. He has shown it to be a notorious fact that gold 
when* coined bought more commodities than it could buy 
when uncoined bullion. He has also shown that for prac- 
tical purposes value means price and it is easy to see that 
the word value should not be used in political economy at 
all, for the very good reason that the word is, admittedly, 
vague, and as he says "price is more special, and has a 
meaning periectly precise." 

Professor Fawcett M. P. says in regard to price: "In 
political economy a system of propositions may be enun- 
ciated, which treat of the value of commodities, and not 
of their price. This course is usually adopted, but it only 
adds to the difficulty of the subject, without attaining any 
practical object of utility; for none of the transactions of 
trade and commerce in civilized countries are ever ar- 
ranged without the machinery of a monetary standard. 
If it is desired to ascertain how much of one commodity 
another will exchange for, the calculation is always made 



42 ESSAYS IN POLITICAL ECONOMY. 

in money; the prices of the commodities, and not their 
values, are considered." 

I would just like to say that if the use of the word 
value only added to the difficulty, I would not have much 
objection, but it simply makes political economy a farce. 

In connection with the question of ratio between gold 
and silver it will be useful to have before us an extract 
from Mulhall's Dictionary of Statistics. On page 306 he 
gives Soetbeer's table of the production of gold and silver: 



Per 


iod 


Gold 


Silver 


1493- 


-1520. . . 


.. 162... 


■■ I316 


I52I- 


-1600. . . 


•• 593- •• 


.. 21519 


160I — 


-1700. . . 


. . 911. .. 


•• 37234 


I7OI — 


-1740. . . 


.. 638... 


• • 15736 


I74I- 


-1780. . . 


. . 906 . . . 


• ■ 23718 


I78I- 


-1800. . . 


.. 356... 


.. I7581 


180I- 


-1820. . . 


. . 292. . . 


.. 14350 


1821-^ 


-1830... 


. . 142. . . 


. . 4606 


183I- 


-1840. . . 


. . 203. . . 


.. 5965 


184I- 


-1850. .. 


.. 548... 


. . 7804 


185I- 


-i860. . . 


. . 2018. . . 


.. 8956 


1861- 


-1870. . . 


.. 1885 . .. 


. . I220I 


187I- 


-1880. . . 


. . 1715. .. 


.. 22347 


188I- 


-1888. . . 


. . 1067 . . . 


. . 21960 



396 Yrs. Total, 11436 215293 

In these tables we find, taking the figures since the 
thirties and forties, when the ratio of fifteen and one-half 
to one was maintained by France alone in Europe, the 
total production from 183 1 to 1888 was: 

7 cms 

Gold 7436 

Silver 79233 

Thus the proportion in that period was about ten and 
two-thirds tons of silver to one ton of gold. But in the 
hundred years from 1701 to 1801 the proportion was thirty 
tons of silver to one ton of gold. 



ESSAYS IN POLITICAL ECONOMY. 43 

Now, if after one hundred years of production at 
thirty to one the ratio was in point of fact maintained at 
fifteen and one-half to one, by France alone for seventy 
years, surely the reduced production of ten and two-thirds 
tons of silver to one ton of g'old is not a natural cause cal- 
culated to change the ratio from fifteen and one-half to a 
ratio twenty-five or thirty to one? 

No, the ratio was not changed by nature. The ratio 
was simply changed by swindlers, acting with those in 
whose hands the people had trusted the powers of govern- 
ment. It was a deliberate act; it was fully adverted to; 
they knew well what would be the effect of that act; that 
it would most greviously oppress the working people; but 
they were not deterred from crime by any scruple; God, 
religion, country, humanity, honor, justice — all were sac- 
rificed on the altar of that cupidity which is the spirit of 
our vaunted' a^e/ 

Bastiat, in his "Harmonies of Political Economy," 
page 135, says: "I say then value is the relation of two 
services exchanged." Then he continues: "The idea of 
value entered into the world the first time that a man 
having said to his brother, do this for me and I shall do 
that for you — they have come to an agreement; for then 
for the first time, we could say — the two services ex- 
changed are worth each other. . . . Here you have value 
discovered and defined (he compares himself to Newton). 
Here you have it in its rigorous economic exactitude, ex- 
cepting the touching trait relative to friendship, which 
carries us into another sphere, that of sympathy. . . . We 
are all blind or impotent in some respects, and we soon 
come to understand that by assisting each other (true but 
that has nothing to do with the logic of the question, it is 
an appeal to sympathy when reason fails) the burden of 
misfortune is lis^htened. Hence exchange." 



44 ESSAYS IN POLITICAL ECONOMY. 

I think I have quoted enough to do him justice. But 
we know that services have not originated value, either in 
primitive society, or in complex civilized society. In a 
simple community, one man obtained possession of an 
article without a moment's labor. Another man obtained 
an article with a whole year's labor. This latter sees the 
other article, admires and desires it, and makes "effective 
demand," offers his article in exchange. The other man, 
seeing what is offered, also admires and desires it — they 
come to an agreement. The exchange is made and value 
comes into being. In civilized society money is exchanged 
for commodities and commodities are exchanged for 
money. The proportion in which they exchange is 
definite value or price. The price, in civilized society, is 
fixed mainly by general agreement instead of by individual 
agreement, and hence is called "market price." 

Many things affect the "effective demand;" many 
things affect the supply; but the effective demand and the 
limited supply owned by others are the proximate causes 
of value. 

His predominating ideas of "effort and satisfaction" 
are, substantially, the same as Professor Jevons' "Pleasure 
and Pain" theory. One would think that both of them 
were studying bees in a bee hive, and not men endowed 
with free will. 



III. 

MONEY. 



Let us ask ourselves quietly, what is money? It is an 
important question. When we ask what is money, we 
ask, simply, what is its own nature. We do not ask, yet, 
what money does, but what it is. When we ask what is 
the real nature of the thing called money, we mean to ask 
what is it that essentially constitutes money? 

Money is a thing not found in nature as created by 
God. Money is created by man, that is to say, money as 
money, is created by man. The material of money is not 
created by man. But out of a material created by God man 
creates money. Just as out of the material created by Ood 
man creates a statue. 

Then, just as we would ask what is the nature of the 
thing called a statue, which man has created.^ So do we 
ask what is the nature of the thing called money which 
man has created for his own purposes.^ We do not ask 
what it was, at present; we ask what is money, now? 

The two essential constituents of money are, (a) the 
material substance chosen; (b) the mark, impressed upon 
the substance, representing the government fiat which 
declares that it is a legal tender for all debts both public 
and private to the' extent named on each piece of money. 

The substance is chosen, now, in every civilized 
country, for certain stated reasons. 

The substance ought to be chosen for good and suffi- 
cient reasons, since men are rational beings. 

Thus, money is a substance which bears the mark of 
the legal tender fiat of a government. 



46 ESSAYS IN POLITICAL ECONOMY. 



But when we begin to consider what material sub- 
stance ougJd to be selected, for this purpose, whether 
gold, silver, copper, leather, paper, or some other substance 
— and if more than one substance, in what proportions — 
then the "war is on." But, mark well, this is not a war 
over the definition of money; it is a war about the ma- 
terial of that which we have defined. 

For this much is absolutely certain, that (a) money 
must be some substance, and (b) it must bear the mark 
representing the legal tender liat of the government. 

No civilized government in the world will recognize 
any substance as money, in a court of law, which does not 
bear the mark of the legal tender fiat of the government. 

The severest punishment is inflicted upon any one 
who dares to put that legal tender mark upon any sub- 
stance without the authority of law. 

Professor Fawcett, M. P., of Cambridge University, in 
his "Manual of Political Economy," on page 350, writes: 
"Any substance may be selected as this 'medium' of ex- 
change; it has, however, been generally found most 
advantageous, for reasons which will be presently stated, 
to chose the precious metals as the 'medium' of exchange." 

Here he bears testimony to the truth that the partic- 
ular material of which money shall be made depends, 
entirely, upon the choice of each particular nation. Money 
{(lua money), in point of fact, is purely the creature of 
convention or law, and, we shall see later on, that most 
momentous consequences depend upon the choice which 
is. or may be, made by each nation. 

The reasons given, by Professor Fawcett, on pages 
351 et seq., are: "The reasons why the precious metals are 
almost universally employed as money, in preference to 
any other substance, will at once become evident by con- 
sidering the purposes which money has to fulfill. The 
functions of money may be divided into two leading 



ESSAYS IN POLITICAL ECONOMY. 47 

classes. First, money serves as a measure of value. 
Second, money is a universal medium of exchange." 

Now, let us go slowly. Here we have the reason 
which has been given. The reason why a thing was chosen 
is one thing. The reason why a thing ought to be chosen 
is quite another thing. 

When several substances are put forward, for each of 
which it is claimed that it alone is the best for our pur- 
pose, then, to say that one in particular is the best for our 
purpose because it is the best for our purpose, is manifest 
sophistry. Then the best for the purpose of a compara- 
tively small number of rich financiers, is not, necessarily, 
the best for the whole community. 

When Professor Fawcett speaks, on page 353, of an 
"invariable standard of value," his language is confused. 
He compares a mile as a standard of length, a ton as a 
standard of weight, and money as a standard of value, 
and, then seeing the difficulty which he has created for 
himself, he says: "It is obvious that it is impossible to 
obtain an absolutely invariable standard of value, because 
the value of every substance which is known to us is liable 
to variations." 

But he, and a great many others, have not begun to 
see the truth. Let us, for the sake of argument, suppose 
that there was no more gold in the world; and that the 
gold was accurately counted. Now we can procure no 
more. Very well; can the value of gold money, even 
then, remain invariable, or will it only change "slightly.^" 
Or will the value of that money only change slowly and in 
a course of years.^ Not at all. It will change every hour 
in the day, and every minute in the hour. It will change 
faster than the "tick, tick, tick" of the telegraph can 
bring the news. 

What, then, means a "standard of value.^" It means 
that one thing, and one thing only, shall be recognized as 



48 ESSAYS IN POLITICAL ECONOMY. 

a legal standard of value. That one thing is money. That 
means that we shall not have gold one day, silver another 
day, and copper, tin, lead, iron, corn, wheat, hay, day 
after day, in succession, but always the one thing — money. 

We cannot prevent changes in the value of money, 
but we can prevent arbitrary legislative changes, such as 
we suffer from for so many years; we can prevent bankers 
and financiers from arbitrarily adding to the ordinary, 
unavoidable, natural changes. 

We cannot maintain the one value in the standard, 
but we can maintain one standard. 

Futhermore, we must consider that man is a rational 
being, essentially different from the brute, and while the 
brute devoid of reason must take things as -they come, 
man is the intelligent ruler of the earth, appointed to that 
dignity by God. When man finds, by practical experience, 
that he suffers from alternate floods and droughts, he will 
exercise the reason which God gave him, to devise elab- 
orate means to prevent a recurrence of those evils, as far 
as lies in his power. 

Professor Fawcett is pleased to admit that: "If, how- 
ever, in any country, some substance is made to perform 
the functions of money, that substance is as justly entitled 
to be considered money as our own gold and silver coin." 

Now, we have already seen that he defined value as 
expressing a relation and that it essentially implies com- 
parison. But on page 354-355 he uses the expression 
"intrinsic value" several times. But in Webster's Dic- 
tionary "intrinsic" means withinside or essential. Then, 
the "intrinsic value" of a thing would mean something 
withinside or essential to that thing as it lies buried in the 
ground, before man discovers it. Then value would not 
be a relation or imply comparison. Then he says, on 
page 356: "Although it is not improbable that the value 
of gold and silver may in future years be greatly depre- 



EE5AY5 IN POLITICAL ECONOMY. 49 

ciaicG. by tncse 'liscovcnes. But it is plain that if the 
value is ''intrinsic" or * "wnthinside"' or "essential" before 
the gold is discovered by man, then the value can neither 
be "depreciated," nor appreciated by these discoveries. 

Again, he sa3^s: "Nations, even from a remote 
antiquit3-, have alwa\"s placed a great value upon gold and 
silver. . . . Moreover, gold and silver have alwavs been 
sufficient!}- rare to be esteemed for their scarcity. . . . The 
great value jfosse^sed b}' these metals . . . " 

Here we have contradiction tumbling over contradic- 
tion. For, that which is intrinsic is not placed upon it by 
nations. Nor is the esteem, which people have for any 
material substance, any intrinsic propertj' or quality'' of 
that substance. If metals * "possess" value then the value 
is not placed upon them b\- nations. Furthermore, to say 
that "even from a remote antiquit}-" gold and silver have 
been used, does not necessarily prove that they ought to 
be used here and now. Mere material instruments, in the 
nature of things, are always liable to be changed. 

It would be a poor argument to say "let us, now, use 
the stone tomahawk as a weapon, instead of the repeating 
rifle, because the tomahawk was used 'even from a remote 
antiquity. ' " 

That which was useful to man, as a mere material 
instru7ri-erit, in a state of simple barbarism, is not neces- 
saril}' useful to him in a state of complex civilization. 

Let us consider, carefull}-, the term "medium of 
exchange" used by Professor Fawcett, and b}- all other 
writers. It is not ver}- hazardous for me to sa}- that 
science requires a strictness and exactness not required in 
an ordinary chat or gossip. 

Now, in real hfe, money is, invariably, one of the 
things exchanged, when and wherever it is used. WTiere, 
then, is the "medium.'" See a man go into a store, he 
hands monev across the counter, and receives in exchange 



50 ESSAYS IN POLITICAL ECONOMY. 

a commodity. Money is exchanged, directly, for com- 
modity and commodity is exchanged, directly, for money. 
There is no medium. So far the transaction is just as 
much, essentially, an act of barter as any barter before 
the time of Abraham. But we see other things. We see 
not only the counter, the store, the scales, the weights, 
the measures; but we see also, in thought, the country 
roads, the railroads, the canals, docks, harbors, the steam- 
ships, and the sailing ships, the telegraph, the postal 
service, wagons, bridges, banks, market places, clearing 
houses, and other "mediums" of exchange. 

Exchange of what.^ The exchange of money for com- 
modities, and of commodities for money. 

The functions of money, then, may, more strictly, be 
divided into these two leading classes: 

1st. Money serves as a standard of market price or 
value. 

2nd. Money serves as a legal tender. 

M. Chevalier defines money as a "measure and an 
equivalent." But "equivalent" is not so definite as "legal 
tender," for there are very many equivalents which are not 
"legal tender." 

It seems to follow from this that money, also, serves 
to promote productive industry. 

Mr. John Stuart Mill admits, in "Principles of Political 
Economy," book III, chapter XIII, section 5: "The sub- 
stitution of paper for metallic currency is a national gain: 
any further increase of paper beyond this is but a form of 
robbery." 

And, in chapter XVII, section 4, he says: "The notion 
that money alone is wealth has long been defunct, but it 
has left many of its progeny behind it, and even its 
destroyer Adam Smith retained some opinions which it is 
impossible to trace to any other origin. ... It is in truth 
a surviving relic of the mercantile theory, according to 



ESSAYS IN POLITICAL ECONOMY. 5 1 

which, money being the only wealth, selling, or in other 
words, exchanging goods for money, was (to countries 
without mines of their own) the only way of growing rich 
— and importation of goods, that is to say, parting with 
money, was so much subtracted from the benefit." 

Is it not incomprehensible, since the overthrow of the 
mercantile theory was the starting point of free trade, 
that Mill, and Smith, and Fawcett, should contend for the re- 
tention of gold monometalism.'* But those men contended, 
not only for gold monometalism, but for the forced impor- 
tation of gold into the country, by artificial means, 
antagonistic to free trade, and by .means quite in harmony 
with the mercantile or protective theory, as witness the 
English Bank Act of 1844. 

Think a little. Free trade is not restricted trade. 
Where there is serious restriction on trade there is not 
free trade. The old fashioned, the old mercantile theory, 
the direct restriction on trade, is the well known "■high 
tariff,'" or duties on im,ports, to prevent importation of 
commodities. There has been, also, a direct prohibition 
on imports and exports. But, -for the duties on imports, 
this much may be said, that the duties collected go to the 
government, let them be ever so exorbitant and unjust. 
But, when the government, or we should say the law, 
establishes an institution, or several institutions, which 
are bound by strict enactment to do a certain thing, 
to-wit: to pay gold on demand, and to keep a fixed reserve 
of gold, under penalty of being declared bankrupt, and of 
being irretrievably ruined; and, when, in order to carry 
out the law, these institutions, which we call banks, are 
obliged to restrict trade — they must do so to save them- 
selves — then there is not only ''tariff'' or restriction on 
trade, but the worst is that the tax does not go to the 
government, and the widespread ruin of business houses — 



52 ESSAYS IN POLITICAL ECONOMY. 

throwing thousand^ of men out of work — which it causes, 
is far in excess of any direct tax. 

In considering this question of money it seems more 
than excusable, in fact necessary, that we should place 
before us quite an extensive quotation from "Logic," by 
Rev. Richard F. Clarke, S. J. We read, on page 405: 
"Of all fallacies the commonest is that of hurrying to an 
unfounded conclusion fr'om one 07- more instances, or of 
arguing from the existence of some circumstances in one 
instance of a phenomenon to the existence of the same 
circumstance in another instance presented to us. The 
infant who looks out of the window and on seeing a man 
pass by in a black coat and hat cries out 'Dadda;' the too 
credulous invalid, who, because he has swallowed a box 
of patent pills and afterwards recovered, attributes his 
recovery to the pills; the cynic who condemns all ministers 
of religion as insincere, because he has on one or two 
occasions met with a clergyman who did not live up to his 
profession; the traveler who denounces the dishonesty of a 
country, because he has once been cheated during a passing 
visit there; the superstitious of all kinds, who attribute 
good luck to horseshoes nailed over the door, or ill luck to 
having seen a magpie or walked beneath a ladder; all 
these and ten thousand more are fallacies of example or 
imjperfect induction. They leap from a single instance, or 
a handful of instances, to a universal conclusion, often 
forgetting or leaving out of sight the cases that are fatal to 
their too hasty generalization." 

And thus it is that, not merely ordinary people, but 
professors of Political Economy, if you please, "leap from 
a single instance, or a handful of instances," to the uni- 
versal conclusion that no paper money is true money or 
that all paper money is utterly bad if it be inconvertible. 

Thus John Stuart Mill (like others) contents himself 
with little more than a bare recital of the well known fact 



ESSAYS IN POLITICAL ECONOMY. 53 

that France issued paper money, called assignats, and 
disaster followed. Therefore they conclude, having first 
contradicted themselves in a violent effort to slip in a 
saving clause, that all inconvertible paper money is utterly 
bad. _ They argue thus: all inconvertible paper is utterly 
bad, but it is possible to have an exception, but in conclu- 
sion all paper money is utterly bad. 

In the case of France we should consider the quantity 
of paper money and the population and wealth of the 
country at the time, the great rapidity of the issue and the 
consequent too sudden inflation of the currency, as opposed 
to gradual inflation; then the paper was not inconvertible, 
in a legal sense, it was nominally or legally convertible, 
but physically inconvertible; and we must consider that a 
vast mass was a fraudulent issue, not merely by forged 
paper, but for fraudulent purposes in the absence of value 
received by the country for the paper issued. 

In the case of the Argentine Republic we know from 
official reports that paper was issued for two hundred and 
fifty thousand dollars on the security of property which 
was only worth fifteen thousand dollars. To argue from 
that against paper money, would imply that if twenty times 
the value of property was loaned in gold money it would 
be quite safe and legitimate business. 

We cannot ignore the success of the Venetian paper 
money for centuries. We cannot ignore the success of the 
more modern Scotch paper money for two centuries, even 
though it was not nominally inconvertible. Nor can we 
ignore the indisputable facts of the wildest, maddest, spec- 
ulation, panics, and disaster, in countries where gold 
monometalism obtains, and where paper money is at a 
minimuni. 

How absurd it would be to argue that because the 
politics of the United States are full of corruption 
and that much of the public press and public officers 



54 ESSAYS IN POLITICAL ECONOMY. 

and caucusses and primaries are in "harmonious" corrup- 
tion therefore the whole people are alike? We know that 
the people are sound and that is why we appeal to them. 

It does not follow that because some paper money was 
bad, therefore all inconvertible paper money is bad. Nor 
would it follow that because some inconvertible paper 
would be good, therefore all inconvertible paper would be 
good to an unlimited amount. 

Now we have said that money is a material substance 
with the mark, impressed upon the substance, representing 
the government fiat which declares that it is a legal tender 
for all debts both. public and private to the extent named 
on each piece of money. It serves as a standard of 
market prices. The market prices are the recorded pro- 
portions in which commodities are now being exchanged 
for money. 

The goods and the money are the things exchanged 
by various means or mediums of exchange. In no case is 
money ever the ' 'medium!" Money is, always and every- 
where, one of the things exchanged. 

. The market prices of money are the quantities of the 
various commodities given for money. The markel; "prices 
of commodities are the quantity of money given for them in 
the public market. The market price is the value. 

John Stuart Mill has written, in his "Principles of 
Political Economy," book III, chapter VIII, page 297: 
"The value of money is inversely as general prices: falling 
as they rise, and rising as they fall." Again we read: 
"The value of money is to appearances an expression as 
precise, as free from possibility of misunderstanding, as any 
in science. The value of a thing is what it will exchange 
for: the value of money is what money will exchange for." 

It is a pity he could not always adhere to that, and 
avoid speaking of intrinsic value and many other kinds of 
value in hopeless confusion. But the quotation given 



ESSAYS IN POLITICAL ECONOMY. 55 

above is simply a roundabout way of saying what could 
be said "plump and plain:" that value is the market price. 
But, alas, the "plump and plain" expression has not a 
grand scientific sound. And we affect the scientific in 
this very scientific age. 

Now, as riioney is the legal standard of market prices, 
we say that prices are high or low, according as more 
commodities, or less, must be given in exchange for money 
through the various means or mediurns of exchange. It is 
an every day fact, seen everywhere in the world, that when 
money is offered freely for commodities, the owners of com- 
modities hold back for more money, if it can be obtained; 
and if more money be offered, and if commodities be 
urgently demanded, then commodities become dearer. 
This happens generally when the quantity of money is 
increased. It requires more money than before to obtain 
the same quantity of commodities. But if, on the other 
hand, commodities be freely offered, and the money 
urgently demanded, the money is held back, and if more 
and more commodities be offered, less and less money will 
be given for the same quantity of commodities, than was 
given before. This happens generally when the quantity 
of money is decreased. The quantity, or the increase or 
decrease, of money which is offered or available for offer 
depends on a variety of causes, some natural, some purely 
artificial. 

We are more concerned with artificial causes. There 
may be artificial contraction or expansion of the supply of 
money. Contraction, as when one of the materials in use, 
as money, is no longer used to the same extent. Thus let 
silver or gold be the material of which money is made, to 
change from one to the other, by legislation, may ma- 
terially alter the supply of money, may increase or 
decrease, to a great extent, the quantity of money. For 
one may be produced, at the time, more or less plentifully 



56 ESSAYS IN POLITICAL ECONOMY. 

than the other. Then when both metals are used at the 
same time, as money, that is, equally legal tender, to 
cease to coin one or the other, is not only to, artificially, 
shut off the possibility of an increased supply, but very 
seriously injures the position of the money already coined 
from that metal. The metal loses a market and alarms 
all other markets with the fear of an overstock. Still 
more must this be the case if one of these metals is 
demonetized. To demonetize is to destroy the legal 
tender character of the metal. If that be followed by 
taking the metal out of circulation and selling it wholesale, 
the effect must be disastrous, not only to the country 
which so acts, but to all other countries which had given 
a legal tender character to that metal. This is one of the 
most serious evils of a metallic currency, that one nation 
can not make an arbitrary change without most seriously 
affecting all other countries. 

It is easy to see that if all nations coined only the 
one metal, gold, the result would be appalling. What 
was already scarce would become still scarcer. Besides 
to demonetize a metal which has once been coined is, 
practically, equal to a wholesale repudiation of debt. 

Then nations may have artificial restrictions, in the 
shape of banking laws, and protective tariffs, and reserve 
clauses, all of which must not only affect the country in 
which they exist, but all other countries which "have all 
their eggs in one basket," and are inseparably bound up 
in the same financial tangle, by having their money made' 
of the same scarce metal. We have to disentangle our- 
selves from the meshes of European finance. 

Money is the legal tender for the payment of debts, 
within the jurisdiction of the law which has so enacted. 
Then in the course of unrestricted trade, some people find 
it suits them to export the money as a metal commodity, 
and others follow, and all the metal goes, then the country 



ESSAYS IN POLITICAL ECONOMY. 57 

IS paid for the metal, and is as rich as ever, perhaps 
richer, but the legal tender for payment of debts is gone, 
and no one can pay on demand, and all are bankrupt. 
Bankrupt, yet really solvent. This is an extreme case but 
the danger is visible, even without going so far. 

What an absurd position for the human race, endowed 
with reason to guide them, to have it said that the richest 
nation in the world was in such a position not so many 
years ago, that one man was able to say to the Bank of 
England: "I can draw a couple of cheques tomorrow 
morning which will shut you up at once." (Gilbart on 
Banking, page 354, Vol. 2.) This was in the presence of 
Mr. Gladstone, then Chancellor of the Exchequer, in May, 
1866. Further, on the 12th of August, 1857, the total 
reserve of the Bank of England in London and its branches 
was only ;^58o, 751 sterling, and the "banker's balances 
alone against it on this very same evening were i^5,458,- 
000." (Ibid. p. 340.) 

This same author, Mr. J. W. Gilbart, F. R. S. , formerly 
director and general manager of the London and West- 
minister Bank, in his "History, Principles and Practice of 
Banking," Vol. I, page 384, wrote: "There can be doubt 
that, under. the act of 1844, a sudden exportation of gold 
must cause a sudden contraction of the amount of notes in 
circulation. This 'self-acitng machine' acts by jerks, like 
a steam engine without a fly wheel; and its advocates look 
to the banking department to supply the fly wheel, and to 
cause the machine to move smoothly and equably. It may 
be doubted whether the banking department has the power 
of doing this. But when this is not done the advocates of 
the act throw the blame upon that department. They 
resemble the court preceptor, who, when the royal pupil 
did anything wrong, inflicted the beating on his fellow 
student. If on this occasion the bank did wrong, it may 



58 ESSAYS IN POLITICAL ECONOMY. 

be feared that it was its court connection which led it 
astray. " 

Is an institution, of which these things, and more, as 
we shall see later on, can be written, an efficient instrument 
of trade or a dangerous nuisance.' 

In the work, "On the Probable Fall in the Value of 
Gold," by M. Chevalier, page 125, et seq., we find that his 
chief fear was about the depreciation, not of silver, but the 
depreciation of gold. But we must note the meaning he 
attaches to those words "appreciation" and "depreciation." 
He means here that when gold was depreciated in value, 
as metal, it became appreciated when it was coined on a 
level with silver. In other words, gold was coined into 
ten and twenty-franc pieces, which were then put into 
circulation as equal legal tender with ten silver pieces of 
one franc each, and twenty silver pieces of one franc each, 
respectively. To put it again in other words, when the 
government coined gold, the government, for the nation, 
bought gold. The owners of this gold, now coined, at the 
ratio of one ounce of gold to fifteen and one-half ounces of 
silver, then demanded silver for the gold. Thus the 
nation, through the government, bought gold with silver, 
and gave fifteen and one-half ounces of silver for one 
ounce of gold. But silver was worth more, in bullioii, 
than fifteen and one-half to one. Fifteen and one-half 
ounces of silver were worth more than one ounce of gold. 
Then to buy gold, and to pay more than it was worth, 
was to appreciate a depreciated metal. 

Then, when we read the recital of evils which M. 
Chevalier gives as the result of that course, we are at first 
alarmed; but on reflection, we see that such was only his 
opinion, but that the depreciation was a "notorious fact,' 
recorded in every daily paper, every morning. Then we 
find that, after evidence of depreciation, in one sense, he 
reasons on depreciation in another sense. We find that 



ESSAYS IN POLITICAL ECONOMY. 59 



he is not arguing to the question of appreciating depreciated 
gold, by buying the gold with silver money, but he is 
arguing to demonstrate the evils of quite another thing — 
the depreciation of money itself. 

Is, then, the depreciation of money an evil, and the 
appreciation of money a good.? 

When one side of the scales falls, the other side goes 
up, the side which falls may have had a weight put on it, 
or it may fall because a weight was taken off the side 
which went up. One side cannot fall without the other 
also rising, and, thus, when one man would say that the 
value or market price of commodities had risen, another 
man would say no, the value or market price of money 
has fallen. 

In order, then, to be clear on the point, we must ask 
on which side was the weight put on, or from which side 
was the weight taken off .? If we did not do this we would, 
always, be at at "loggerheads," and the world could never 
come to an agreement. 

Now, is that proposition true, which Mr. Cobden says 
is "the cardinal rule of commerce.?" 

Here is the proposition in Mr. Cobden's own words, 
taken from his preface to the translation of M. Chevalier's 
work, page 4: "Unless, however, the cardinal rule of 
commerce, that quantity governs price, which applies 
infallibly to all other commodities, loses its force when gold 
is concerned, this sudden and great increase must be fol- 
lowed by reduction of value." 

That proposition seems indisputable, other thmgs 
being equal. That being so, as truthful men, we must be, 
quietly, resigned to accept whatever follows logically from 
it, and not commence to dispute it the moment we find 
that it can be, legitimately, used against ourselves in 
argument. 



6o ESSAYS IN POLITICAL ECONOMY. 

We have, then, to consider, (a) that a great increase, 
in the quantity of a commodity must depreciate the value 
or market price of that commodity, and that, therefore, a 
great increase in the quantity of money must depreciate 
the value or market price of money; and (b) we have to 
consider that a great decrease in the quantity of a com- 
modity must appreciate the value or market price of that 
commodity, and that, therefore, a great decrease in the 
quantity of money must appreciate the value or market 
price of money. 

The increase or decrease, here, means relative increase 
or decrease. For a change in the quantity of all things in 
equal proportion at the same time would not have the 
same effect. 

That being so, if a natural increase in the quantity of 
money be an evil, as alleged by M. Chevalier, causing 
great suffering to a whole people, then a deliberate increase 
in the quantity of money, artificially, arbitrarily, through 
legislation, would be an evil, causing great suffering to a 
whole people, plus a crime. 

In like manner, if a natural decrease in the quantity 
of money, caused by an increase of population and wealth 
changing the relative proportions, or otherwise, be an evil, 
as alleged by many, causing great suffering to a whole 
people, then a deliberate decrease in the quantity of 
money, artificially, arbitrarily, through legislation, would 
be an evil causing great suffering to a whole people, plus a 
crime. 

Now, then, is a natural relative increase in the quan- 
tity of money, an evil, causing great suffering to^a whole 
people, as alleged by M. Chevalier.^ 

Is it true that the discoveries of the rich gold mines of 
California, and Australia, and the Oural mines, and the 
mines of Siberia, were by reason of the increased quantity 



ESSAYS IN POLITICAL ECONOMY. 6 1 



of money, an evil, causing great suffering to the whole 
people of the civilized world? 

Is it an evil to have a natural relative increase in the 
quantity of money which can be devoted to productive 
industries? 

We all know that the daily papers are frequently 
filled with alarming threats, that no new money will be 
devoted to productive industries, and that the money now 
so devoted will be withdrawn. What then becomes of 
that threat? If the decrease in the quantity of money, 
and consequent appreciation of money, be a blessing, then 
that threat should be a blessing in disguise. We know it 
is not. 

But, what if then a new mine were discovered, 
doubling the quantity of money, and the owners of that 
new money were, driven by greed, to devote it to produc- 
tive industries? We would have no thanks to give to 
those who made the threats. Would that discovery be an 
evil for the people, or would it be a disadvantage, and a' 
disappointment, to those who made the threats? 

M. Chevalier points out, on page 124 and following 
pages, what is most clearly manifest to us all. He points 
out that the holders of English government stock, and, 
likewise, all holders of other government bonds, while 
receiving the very same number of pieces of money of the 
same weight and fineness as before, would not be able to 
buy as much commodities with them as before. And 
those bond holders would remain in this position, with 
little hope of relief from nature, no matter how much the 
rest of the people might increase in prosperity. Their 
hope would be that, in the course of nature, the increase 
of population and wealth would restore the previous rela- 
tive proportions of money and commodities. But we 
know that an age preeminent, among ages, for its avarice 
and lust, will not be satisfied with any such postponement 



62 ESSAYS IN POLITICAL ECONOMY. 

of the gratification of its desires. The government stock 
of England approaches /(^r^r billions of dollars. 

Mulhall's Dictionary of Statistics, page 260, gives the 
world's ''puhlio deht stated in millions of j^^^'^f^ds sterling 
as follows: 1713, 119; 1763,283; 1793,610; 1816, 1649; 
1848, 1736; 1870, 3876; 1889, 6160." 

Thus the public debt of nations has increased ten fold 
in a hundred years; and in twenty-three years since 1870, 
the increase is 2284 millions of British pounds sterling, or 
an increase of eleven billion four hundred and twenty 
million dollars! The greater part for war. 

The greater part of this fabulous mass of debt was 
floated in London. It was floated at a discount and must 
be paid in full. No one can deny there is an enormous 
temptation there to resist either a natural or artificial 
increase in the quantity of money, which, while leaving 
the number of pieces of money to be paid in interest the 
same, would cause each piece of money to have less value 
or market price in commodities. 

M. Chevalier says: "All those persons, whose incomes 
expressed in monetary units remain the same, would be 
injured by the change to the extent of half of their income, 
all other things being equal. The national creditor is the 
characteristic type of this class of sufferers." 

Then he enumerates the classes who, in his opinion, 
would suffer. Those are: The pensioners, until their 
pension should be increased, all persons who should have 
lent money for a long time on mortgage, all those who 
lived upon fi.xed incomes of long duration, and all those 
proprietors who might have let their land on long lease (he 
also gives individuals or companies who were in receipt of 
annuities in payment for loans of capital, but they already 
come under the head of "lent money tor a long term"), the 
civil and military public servants, who find it difficult to 
obtain an increase of pay, the liberal professions, such as 



ESSAYS IN POLITICAL ECONOMY. 63 

barristers, physicians, professors of every kind, engineers, 
architects, and a multitude of agents of every description, 
and, lastly, most important of all, the working classes. 

In fine, in his very conscientious enumeration of the 
probable sufferers, from an increase in the quantity of 
money, he does not appear to have ommitted a single 
class, so that there would be none who would not suffer. 
There would be no gainers, in his view. Then the civilized 
world must have been given over to intense suffering after 
the gold discoveries of 1849. And that by having metallic 
money the quantity of which was entirely beyond the 
control of men. Was it, then, so.? M. Chevalier proved 
too much. It was not so. On the contrary the increased 
quantity of money was the main cause of the advance of 
prosperity by "leaps and bounds," in which every civilized 
country shared for a generation. But measures of arbi- 
trary interference were quietly on foot. Hints on how to 
work were found in past history. There had been quiet 
nibbling, also, at the question in the early part of this 
century. There was the "resumption" in England, in 1819- 
1823, after twenty-seven years of not paying in gold called 
"restriction." That hint was followed by the American 
law of 1834, which changed the ratio of silver to sixteen 
to one, which was, practically, to close the mints of 
America to silver, because it was manifestly more profita- 
ble to send silver to France, to be coined, where one 
ounce of gold would be given for fifteen and one-half 
ounces of silver, instead of sixteen ounces as in America. 
And that only fell short of total demonetization. So much 
for nibbling. Now come the acts in quick succession, acts 
which cannot be hidden away. There was the Latin 
Union, closing the mints of Europe to silver. Then came 
the audacious acts with all disguise thrown off. There 
was the wholesale, open, demonetization of silver by 
Prince Bismarck — who boasted that by his forged dispatch 



64 ESSAYS IN POLITICAL ECONOMY. 

he brought on a war which caused the slaughter of hun- 
dreds of thousands of human beings. Is it not justifiable 
to look with grave attention, and with grave suspicion, 
upon the act of such a man.'' Then came the demonetiza- 
tion of 1873 in America. Then came the "make-shift act" 
of 1890. Then came the demonetization by Austria in 
1892. And, lastly, India forms the rear guard in the long- 
drawn-out procession of marauding acts. 

And this has been attended by a great prosperity — 
this decrease in the quantity of money.^ Has it.'^ Are 
there no thunders of discontent shaking the civilized world 
to its foundations.^ Are all the vast assemblies of working 
men in all lands rejoicing, not cursing and complaining.' 
Is all the horrid recitation of suffering but a nightmare.' 
Or is it not very real.' 

The "financial" policies of nations were directed by a 
few. The financiers stand in the "dock," before the 
world, and hear the indictment repeated from every side — 
and what an indictment! They may look helplessly and 
hopelessly, at each other, but in vain do they look for 
escape. Their advocates may argue and argue, but, they 
cannot obliterate those acts, which are recorded, before all 
men, for all time, and registered before high heaven. 

The acts are those whereby they decreased the quan- 
tity of money, artificially, and, arbitrarily, through legisla- 
tion, knowing well the effects which those acts would have. 
Is there no mercy.' None. No softening of the indictment.' 
None. They showed no mercy. They shall receive no 
mercy. 

M. Chevalier, in the work already referred to, on page 
31, says: "Let us insist upon this truth, which may be 

given for another definition of money pieces of 

money are merely ingots of uniform weight and fineness 
for each description of coin, and certified as such by 
Government, by means of an impression which it stamps 



ESSAYS IN POLITICAL ECONOMY. 65 



upon them. They are so much and no more. Govern- 
ment places its mark on them in order to attest their uni- 
formity, but there its mission and its duty end. The form 
which it gives them, the effigies and inscriptions with which 
they are impressed, are of precisely the same character as 
the marks stamped upon silver plates or spoons, and which 
are a guarantee that the government has verified its 
fineness." 

Now, excuse me, but there is something more. Let 
us see : 

Take a piece of gold or silver, untested, and without 
any mark, and which every one would have to test and to 
judge for himself. 

Then take a piece which has been tested and marked, 
and marked by government, not by private persons, and 
certified as to its weight and fineness. 

It is scarcely necessary to say which would be prefer- 
red by all persons. 

M. Chevalier, and every other writer, has stated that 
the government mark was a great improvement. And a 
great improvement made the stamped metal much superior 
to the unstamped metal. And the stamped metal, being 
much superior, would, of course, be in much greater de- 
mand. But a greater demand must needs cause a greater 
value. And that which partly caused the greater demand, 
also caused, through that, a greater value or market price 
of the metal. 

But excuse me there is yet more. The government 
also, by fiat of law, declared and enacted, that the said 
metal should be full legal tender in redemption of all debts 
public and private, and also enacted that nothing else 
should be invested with that special privilege. 

Will any one look me straight in the face, and say 
that the said special and extraordinary privilege did not 
cause the metal to be in much greater demand .'' Nay! the 



66 ESSAYS IN POLITICAL ECONOMY. 



act of government made the metal absolutely indispensa- 
ble, so that every one was, not merely tempted, to buy the 
metal, but every one was actually compelled to buy the 
metal, in order to be able to pay debts. 

Ah! There is something, more than merely ingots 
there, more than uniformity, more than weight and fine- 
ness, more than certification, more than stamp, more than 
efSgies and inscriptions, more than "the marks stamped 
upon silver plates and spoons." Nay! my friend, more, 
even, than a guarantee. There was the legal tender fiat, 
and the guarantee, which none other things possessed to 
give them an enhanced value or market price. 

Still, more, there was the Indispensableness. It is an 
unquestionable truth. Yes! M. Chevalier — "Let us insist 
upon this truth." 

In connection with the subject of widespread suffering, 
above referred to, the outrageous doctrine is put forward, 
in this infidel age, that work should not be provided for 
the poor by the public authority. 

Here is the true doctrine, from " Hill's Moral Philoso- 
phy," p. 238 : "In considering the matter proposed by 
the above objection, it will help towards clearness of 
thought to distinguish different classes of poor people. 
Under the first may be included all industrious laboring or 
working people who, we shall suppose, wish to live only 
by upright and legitimate means, but who, here and now, 
cannot obtain wages that suffice for their support. It is, 
loithout any doubt, the solemn duty of public authority to 
protect them in their natural right to the necessary means 
of living." Here is a Jesuit, Rev. Walter H. Hill, S. J., 
Professor of Philosophy in the St. Louis University, an 
American Jesuit, writing this in his work as far back as 
1878, and he took it from the great Jesuit Suarez, who, 
three centuries ago, denounced and combatted the heresy 
of the Divine Right of Kings. And the doctrine is abun- 



ESSAYS IN POLITICAL ECONOMY. 6/ 



dantly confirmed by Pope Leo's Encyclical on the Condi- 
tion of Labor. And yet the ignorant little modern infidels, 
with a lie on their lips — for they live by lies — say that the 
Jesuits are the enemies of progress and liberty and of the 
working classes. Why, the Jesuits were the pioneers of 
liberty, for centuries before these empty-headed lying infi- 
dels were known or heard of or thought of. 

But there are too many Catholics who act the infidel 
in spite of the teachings of the supreme pastor of the 
church. 



IV. 
FINANCE. 



The public discussion of financial questions, eagerly' 
carried on everywhere, the measures proposed in Congress, 
and the recent Monetary Conference, convoked at the 
instance of the United States government, make quite 
manifest this truth that the United States has not a satis- 
factory system of finance. 

We need only glance over the history of American 
and English finance, to perceive how closely interwoven 
are the financial systems of the two nations; and that their 
financial legislation has been purely tentative, experimen- 
tal, feeling the way. 

However, this observation is not advanced in censure, 
but rather, in approval of the tentative and cautious, as a 
method. 

From the nature of the financial question, it consults 
best for the public good, to move cautiously. 

Even when one system may be seen to be better than 
that which now exists, the change ought not to be made 
too abruptly or too rapidly. 

The financial legislation of this century has one very 
striking character- — or mark. It was purely arbitrary. 
That is very objectionable. 

The masses of the people, who, theoretically, are 
rulers and sovereigns, have never yet been fairly and 
squarely asked and given a fair opportunity to decide what 
system of finance ought the legislative body to establish. 

It is true that the people, themselves, ought to be 
guided by the eternal principles of justice. Rut, hitherto. 



ESSAYS IN POLITICAL ECONOMY. 6Q 

the few have said, with an assumption of mastership not 
granted by the Constitution: "We will manage the 
finances, let the people manage all the rest." 

The system which the few manage necessarily re- 
quires, as an inevitable part of it, that they should 
manage the tariff. 

In no country, as yet, have the people obtained that 
control over the tariff which belongs to them; and the 
Democrats, who, as a rule, hold fairly sound views on the 
tariff, still, laughably, stultify themselves by the glaring 
contradiction of adherence to the system of gold-monomet- 
allism now existing. 

The late J. W. Gilbart of the London and West- 
minster bank, in his work on Banking, Vol. i, page 330, 
wrote: "We consider that any system of administering 
the currency, which prohibits the banking institutions of 
the country from granting relief to the commercial and 
manufacturing classes, must be unsound. We should 
condem such a system at once, even if we could not detect 
the fallacies on which it was founded. In political economy 
we can judge of principles only by their practical effects — 
and any system which produces these effects must be un- 
sound. When seasons of calamity occur, it is not for the 
national bank to exclaim, "sative qui pent." They ought 
to co-operate with the government in attempting to relieve 
the distress, and to preserve the tranquility of the country.'' 

Now, assuming that the financial principle, herein 
contained, will be readily conceded, we must, then, con- 
sider the ability of the government and banks to carry out 
their very laudable desires. ' 

It may be said, to be rid of a very troublesome ques- 
tion, that we must always have these panics. It is untrue. 

It may be said that we must always have wars to 
slaughter hundreds of thousands of human beings. It is 
untrue. 



70 ESSAYS IN POLITICAL ECONOMY. 

These things can and must be stopped, if those who 
have taken control of affairs, and all who desire the rule 
of law and order, wish to avert, as I, certainly do, a furious 
uprising and a worse than the reign of the guillotine in 
France one hundred years ago. 

From such a terror God save us all. 

We know that the "banking power" of England and 
of America has increased ten- fold in the last fifty years, 
and this means a more onerous responsibility imposed 
upon the government and the banks. 

The figures are given by Mulhall, in his Dictionary of 
Statistics, p. 75, as follows: "It appears that the amount 
of capital employed in banking has almost doubled since 
1870, and multiplied ten-fold since 1840. In 1840 it was 
^^"308,000,000; in 1870 it was ^1,602,000,000; and in 
1888-90 it was ;{!;'3, 197,000,000. or in American money, 
$I5.935.000'000- The capital in railways has increased 
from ^41,000,000, in 1840, to i^5, 736,000,000, in 1888, 
or in American money $28,680,000,000. Total between 
banks and railways $44,665,000,000. Then we have the 
enormous development of government bond issues in this 
century .which, in themselves, make the present financial 
conditions essentially different from anything recorded in 
history. 

This naturally suggests the thought that revolution- 
ized financial conditions, which have stolen upon us almost 
unawares, imperatively require a change from primitive 
and ancient systems and methods to such as may be suited 
to the accomplished fact of changed conditions. In former 
times money was loaned upon bona lide commercial bills, 
upon chattels and personal security, and upon mortgaged 
realty. But the loaning of money on stocks, bonds, and 
shares, and on "watered railroad and mining stocks" at 
that, brought an entirely new and disturbing element into 
the field. 



ESSAYS IN POLITICAL ECONOMY. /I 



I know, for "I speak by the book," that there are 
bankers and financiers who think that money should be 
withdrawn, by banks, from investment in commercial 
paper, and chiefly invested in bonds, stocks, and shares. 
They look upon loans to farmers as a paltry business for 
banks. They want to deal in big loans, with other peo- 
ple's money entrusted to their honor, up in the millions of 
dollars, on what they grandly call readily convertible 
securities. 

Thus it is that we hear all the senatorial speeches 
addressed to the subject of "confidence" in "our securi- 
ties. " Thus it is that we hear it put forward, by men who are 
no longer ashamed of their degradation, that London stock 
brokers and financiers will buy our "securities" if America 
finances exactly to suit those London "sharks." But if we 
do not suit the London "sharks," woe to America! That 
is to say, this great American republic, with sixty-five 
millions of people and sixty-two billions of wealth, cannot 
live, cannot carry on business, unless the "aforesaid" 
London shai'ks are quite satisfied to let it be so. 

Now let us talk plain "United States" language. It 
would be no loss, but the release from a great curse, if the 
stock exchanges of New York and London were to fall 
through the crust of the earth and never to stop until they 
reached the centre of "Hades." 

Here is a description given by that eminent exception 
among London bankers, Mr. Gilbart, Vol. H, page 336: 
"The railway accounts had long been 'cooked,' and the 
too well known results of the process followed — sudden 
and enormous depreciation of railway stock, widely spread 
distrust, a drain upon the American bank, and failures 
shaking commercial credit to its centre. The proximate 
cause of this terrible crisis in America was the stoppage of 
the Ohio Land 'and Trust Company, an establishment 
which made advances on financial securities, and which, at 



72 ESSAYS IN POLITICAL ECONOMY. 

the time it stopped payment, held deposits to the amount 
of $6,000,000. Hereupon, a dehberately planned system 
of 'bearing' operations was put in movement, which was 
described in the Times' city article of September 10, 1857, 
as follows: 'There is actually a powerful combination for 
the avowed purpose of bringing all the principal under- 
takings to ruin. A large body of active persons are known 
to be associated for the purpose: they influence the press to 
work out their views, and are alleged not merely to oper- 
ate with a joint capital, but to hold regular meetings, and 
permanently retain legal advisers, whose chief vocation, it 
may be assumed, is to discover points that may enable the 
validity of each kind of security to be called in question, 
and thus to create universal distrust.' " 

Again in 1873, it was the same old song, "securities" 
had to be realized and consequently prices (of securities) 
fell. Huge 'bear' accounts were opened, which still fur- 
ther depressed prices (of securities). 

And now in 1893 it is the same song still. Even as I 
write, I take up the daily paper and read "whiskey ring- 
squeezed" and again "confidence returning, American 
securities rise in prospect of the repeal of the Sherman act." 

Let us face the truth. A million of honest American 
citizens out of work and starving, cannot obtain the sym- 
pathy, much less the patriotic championship roused to just 
anger, of the American press, as these poor distressed stock 
brokers obtain it on the least disturbance of "securities." 

Can anything be more humiliating.-* Why one would 
think that there was no other business, no other industry, 
in all these United States, except "securities." 

Now billions worth of negotiable bonds are at all 
times suspended, threateningly, above the money market. 
No one can tell how much may be used at a moment to 
disturb the monetary system as at present established. 
These new conditions with the new gold monometalism 



ESSAYS IN POLITICAL ECONOMY. 73 

established, arbitrarily, by legislation, necessitate large 
gold reserves, which, it is plain do not make gold more 
abundant or cheaper; and, as nothing is plainer than, if 
international trade be left free and unrestricted, men will, 
most assuredly, export gold whenever it suits their own 
iinances to do so; and as this renders the coutitry liable at 
any moment to be deprived of legal tender, even if only 
for a time, so that daily debts cannot be daily paid, when 
such a crisis occurs; therefore it is, quite naturally, as an 
inevitable part of the gold monometallic system, that the 
financiers have been, by absolute necessity, obliged to look 
around for some artificial restriction on the freedom of 
international trade, which can prevent that outflow of gold 
which takes place in the natural course of free trade. 

England has found the "Bank Act of 1844" 3-s a 
"make-shift." 

Other countries have resorted boldly to the more 
direct means of "the high tariff" or mercantile theory, as 
the only way of retaining gold. Both means, the direct 
and the indirect, are violently opposed to freedom of inter- 
national trade. Both systems have, in the presence of all 
men, manifestly failed in securing the end for which they 
were established, to-wit: To keep gold in the country by 
artificial means. Not only have they failed, they have 
intensified the sufferings of panics. 

Here we have, at its source, the influence which is 
pressing France, Germany, Russia, Austria, and the United 
States, to maintain the "Chinese wall" of high tariff, to 
procure and to maintain gold reserves. This is the only 
offset, which they can devise, against the English Bank 
Act of 1844. They cannot, possibly, from the nature of 
the case, avoid adopting some artificial means of restriction. 
But there can never be freedom of trade where there is 
such artificial restriction. 



74 ESSAYS IN POLITICAL ECONOMY. 

Thus we have visions of that warfare which Bastiat 
described, to him an amusement, a subject for wit, to us a 
terrible oppression, of tariff against tariff, of gold-bond 
issues against gold-bond issues; even wars of conquest, 
wholesale slaughter of human beings, to gratify the avarice 
of financiers«and the ambition of royalty; ruin aud desola- 
tion everywhere. 

It is nearly a century since the civilized world became 
convinced that money is not the only wealth, and that 
such an erroneous notion was the real basis of the old 
mercantile theory and of high tariff, and the chief obstacle 
in the way of the full blessings and benefits of international 
trade. 

Yet, by some unaccountable fatuity, men cannot be 
induced to follow out these views to their logical conclusion. 

They have discussed the tariff by reference to statistics 
of trade and wages, but without any reference to gold- 
monometallism, which is absurd. Gold-monometallism is 
at the bottom of the whole question. 

The old mercantile theory, so much derided, had this 
element of truth in it in the past, that, at least, the tariff 
brought gold into a country and kept it there, even if it put 
a stop to international trade. There were no bonds to be 
sent through the mails then. 

The free traders admitted the fact, but scoffed at the 
stupidity of such a policy, argued that gold is not the only 
wealth, and that even avarice might be more abundantly 
gratified by a more enterprising policy. This was the 
triumphant cry of the great discoverers in "the Lone Dark 
Continent" of political economy — that gold is not the only 
wealth. But, if in spite of this, monometallism is by 
artificial means, arbitrarily, forced upon civilized nations; 
and if such a course is upheld by the free traders of America 
and England; we may be excused for expressing intense 
surprise, at such glaring inconsistency, and at such violent 



ESSAYS IN POLITICAL ECONOMY. 75 



restriction of the freedom of trade. Further it seems 
nothing- short of absurd, to say that the British Bullion 
Report of 1810 has established the doctrine that it is one 
of the fundamental laws of finance that each nation will 
have just as much gold as it needs. It, certainly, is not 
easy to see how, under free trade plus the arbitrary restric- 
tion of free trade, through gold-monometallism, plus the 
English Bank Act of 1844, plus the American National 
Bank Acts, plus the tariff, the different nations could possi- 
bly have a sufficient supply of gold, at the right time, just 
when it was wanted. As a simple matter of fact, plainly 
visible as the noonday sun, the nations do not obtain that 
sufficient supply Hence the "panics" of 1825, 1836, 1839, 
1847, 1857, 1866, 1873, 1878, 1891, 1893. "Next.^" 
These "panics" were not caused by the absence of a gold 
basis. Panics do not arrange themselves so as to suit the 
convenience of all nations. In vain would we piteously 
beg: "Wait until we are through and then you can have 
your panic, all to yourselves." 

"Panics" are inexorable. They attack all gold-mono- 
metallic nations, at once, most impartially. 

It is a surprising popular error, not the error of the 
workingmen, but the error of persons who pretend to 
educate, to speak of England as a free trade country. 
"British Free Trade" is buzzed into our ears. 

Now before England enacted the free trade measure 
of 1846, she passed "the Bank Act of 1844." 

Under the free trade act, gold, naturally, rushes out 
at times, as through an open sluice. Under the "Bank 
Act of 1844," the Governor and Directors of the bank 
of England rush to "put on the screw." 

The telegraph goes out over the empire, and over the 
earth, and it says "Bank rate raised from 2 to 3 per cent 
per annum." Then one rise follows another in quick suc- 
cession, from 3 to 4, from 4 to 5, then 6 per cent, then 



76 ESSAYS IN POLITICAL ECONOMY. 

Ugly rumors begin to circulate, then from 6 to 7, and to 8 
per cent, then public uneasiness displays itself, then from 
8 to 9, to 10, II, and even 12 per cent — the empire quivers, 
and the whole commercial world feels the shock. Imports 
are checked. Exports are forced. Free trade is stopped 
as if by an air-brake. 

Who shall be able to compute the cost to the trade of 
the British Empire by this process and excessive rate on 
commercial paper.^ 

Perhaps we may be allowed to give, here, a descrip- 
tion of what takes place, in the exact words, of an eye- 
witness on the spot, the celebrated English Banker, Mr. 
Gilbart, already quoted, as we do not think it is very rash 
to assume that he, at least, knew the facts, even though 
his reasoning might be objected to by the champions of 
gold. 

In Vol. I, page 154, he wrote: "I have already 
stated that an increased issue of notes can have no effect 
upon the prices of commodities at home, but by influencing 
either the supply or the demand. If the increased quantity 
of money raises the demand for commodities beyond a 
certain point, it will advance the price. And if it increases 
the supply it will lower the price; but in no case can the 
quantity of money in circulation affect the price of com- 
modities but through the channels of supply and demand. 
Just so with the foreign exchanges. An unfavorable course 
of exchange arises generally from our owing a sum of 
money which we have to pay in consequence of our imports 
having exceeded our exports (imports of bonds as well as 
of goods). An increased quantity of money, therefore, to 
affect the exchanges must diminish the amount of our debt, 
and it can do this only by either increasing oar exports or 
diminishing our imports. When money is abundant our 
merchants can import more than formerly. This increases 
our debt. The importers are disposed to lay in stocks of 



ESSAYS IN POLITICAL ECONOMY. 7/ 

goods, and the competition between the importers raises 
the price they give to the foreigner. Hence there are heavy 
sums to be sent abroad. It is true that w^hen money is 
abundant our manufacturers and exporters can also export 
more goods, but the competition among exporters dimin- 
ishes the price to the foreigner, and hence we have a less 
proportionate sum to receive. The exporter, too, having 
abundance of money, gives the foreigner long credit, and 
hence the money is not received in England for a con- 
siderable time after the goods have been shipped. In the 
meantime the exchanges become unfavorable, and gold 
must be sent abroad. (He should have said here — to save 
a few, the little cost of sending something else). Now, 
then, the importer having already a heavy stock of goods, 
will buy no more; he is anxious to sell, for he has not now 
sufficient capital to keep so large a stock. A general desire 
of selling will cause a fall of price. Fewer commodities 
will now be imported, and these obtained at a less price, 
hence there is less money due to the foreigner. The ex- 
porters on the other hand, deprived also of their usual 
accommodation, cannot carry on business to the same ex- 
tent — the supply will be reduced — the competition is less, 
and prices rise to the foreigner. The exporters, too, can 
not give such long credit as formerly; they will call in the 
sums due to them, and hence, more money must come in 
from abroad. As then we have to pay other nations a less 
amount of money for our imports, and they have to pay 
us a greater amount for our exports, the exchanges will 
become favorable. It is obvious that this operation will 
cause great embarassment in trade; in fact it is only by 
producing embarassment that a contraction of the currency 
can effect the exchanges." (All this does not include the 
slaughter of prices in a crisis.) 

Now, in addition to all this we have to consider the 
enormous amount of English investments abroad. Forced 



78 ESSAYS IN POLITICAL ECONOMY. 

by this arbitrary restriction, under free trade, the holders 
of property abroad sell their property, perhaps, or raise 
loans upon it abroad, which is equal, in effect, to the 
export of so much more commodities at "selling out" 
prices, or enormous sacrifice; and then there are those 
millions worth of foreign bonds, the sale of an immense 
quantity of which is also forced, under what is called free 
trade, and this also, in effect, is equal to an enormous 
addition to the export of commodities. 

Contemplated long and deeply, from this point of 
view, England, so far from being a free trade country, 
would appear to enjoy (.-*) the highest, and the most subtle, 
and the most extravagant, tariff, of all the countries in the 
world. That may account for their objections to other 
countries adopting a tariff — England does not want to see 
her "thunder" stolen. It interferes with the working of 
her own indirect tariff, from which, by the way, the gov- 
ernment derives no revenue. 

It is as if, in one year, twelve times the amount of 
produce has to be sold, that would have bought a dollar 
the year before. 

But if the bond holders, the stock brokers, and the 
financiers derive benefit, the burdens of laborers, of the 
agricultural classes, of legitimate traders, of all debtors, 
of all tax payers are enormously increased. And this, not 
through the natural ebb and flow of trade, but through the 
effect of the purely arbitrary bank act of 1844. And yet 
England is, curiously, and we think, most erroneously, 
called a free trade country. 

And the bank act is based on the bullion report of 
1810. 

And it is dogmatically propounded, by some, that the 
bullion report is the true basis of finance, and that the said 
bullion report is, and ought to be, the basis of American 
finance. 



ESSAYS IN POLITICAL ECONOMY. 79 

Professor Sumner, of Yale College, writes in his 
"History of American Currency" that the doctrines of the 
British bullion report "have been established as the basis 
of finance .... they have passed the stage when the 
scientific financier is bound to discuss them." 

We may smile at this off hand way of settling a diffi- 
culty, but we must admit that the professor is more honest 
than many other American writers on finance, who would 
most vigorously deny that the great "American finance" is 
a school boy copy of England. It certainly is "estab- 
lished" in law, but certainly is not established in logic. 

Before the bank act of 1844, the Bank of England 
rate of interest was changed only eleven times in a hundred 
years, from 1742 to 1843, inclusive, as shown by Mr. 
Gilbart's tables. Since the act, in fifty years, the bank 
rate has been changed about four hundred times. Here is 
a continual disturbance and fluctuation in trade. And, 
with this arbitrary act staring them in the face, men still, 
in the simple, innocent, confidence of childhood, call 
England a free trade country. 

But we have yet to consider other effects, and the 
effects, invariably, extend to the United States. By the 
test of experience — -since Professor Sumner claims such 
experience is in his favor — let us judge of the efficiency of 
this famous act even for the purpose for which it was 
arbitrarily enacted, namely, to procure gold at all cost, 
by arbitrary means as it would not come naturally. 

That it has not sufficed, is clearly proven by the 
panics of 1847, 1857, and 1866, and by the suspension of 
the bank act each time. Why was the bank act sus- 
pended.'* Because it was proved beyond the possibility of 
doubt, that England was totally unable to procure the 
gold, either by artificial or natural means, and that the 
continuance of the artificial effort would have bankrupted 
the whole British Empire. In 1861 the failure of the 



8o ESSAYS IN POLITICAL ECONOMY. 

system, tested by experience, compelled the Bank of 
England to go as a borrower to the Bank of France, for 
the paltry sum of fifteen million dollars. 

Writing of the panic of 1847, Mr. Gilbart, in his work 
on Banking. Vol. I, page 331, says: "A severe pressure 
has taken place and in consequence of this severe pressure, 
the act was suspended. It has been denied that this pres- 
sure was produced or increased by the act. But how 
stand the facts? The act was passed, and, as predicted, 
a pressure came; the act was continued, and, the pressure 
increased; the act was suspended and the pressure went 
away. These are not opinions — they are facts." 

But what shall we say of the awful widespread misery 
caused by each of those panics.'^ They form an indictment 
in themselves. In the history of those cruel panics, evi- 
dence is piled upon evidence, until the most exacting 
demand for "complete induction" must be satiated. 

Here is an extract from Mr. Gilbart's work, page 341, 
Vol. 2: "The houses which in 1847 and 1857 have stopped 
payment before the relaxation of the law, may well com- 
plain that, while they have been crushed by the operation 
of the Bank Charter Act, others not more solvent or of 
higher standing than themselves, have been saved by the 

suspension of it The following was the account 

given by the Times, in its impression of May 12, 1866, of 
this bewildering scene: The doors of the most respectable 
banking houses were beseiged, more, perhaps, by a mob 
actuated by the strange sympathy which makes and keeps 
a mob together, than oy creditors of the banks; and 
throngs, heaving and tumbling about Lombard street, 
made that narrow thoroughfare impassible. The excite- 
ment on all sides was such as has not been witnessed 
since the great crisis of 1825, if indeed the memory of the 
few survivors who shared that panic can be trusted when 
they compare it with the madness of yesterday. Nothing 



ESSAYS IN POLITICAL ECONOMY. 8 1 

had happened since the day before to justify such a fear as 
was everywhere shown. Rumor, however, hke the false 
woman in the Laureate's legend 'ran riot amongst the 
noblest names,' and left no reputation unassailed. Each 
man exaggerated the suspicions of his neighbor; and until 
a report at the time unfounded, was circulated in the 
afternoon, that the government had authorized the bank 
directors to issue notes to the extent of five millions 
($25,000,000) beyond the limit imposed by the Bank 
Charter Act, it seemed as if the fears and distrust of the 

commercial world had become boundless A greater 

crash has never taken place in any one week in any 
country in the world. Looking at the list of suspensions, 
it will be seen that their business ramifications are more 
than European. More or less they embrace all the four 
quarters of the world, and we have yet to feel the reaction 
from the effect which the news will produce as it extends 
from point to point." And this is only one of the tests, by 
experiment, of gold monometallism. 

In the letter signed by W. E. Gladstone and by Lord 
Russell, dated May ii, 1866, and addressed to the Bank of 
England, we read: "The accounts and representations 
which have reached her majesty's government during the 
day exhibit the state of things in the city as one of extra- 
ordinary distress and apprehension." By this letter the 
bank act was suspended on the condition that the bank 
rate of interest should not be less than ten per cent. 

But nevertheless it has been said that the bullion 
report of i^io and the bank act of 1844 have been 
"established as the basis of finance, and they have passed 
the stage when the scientific financier is bound to discuss 
them." 

Writing, in connection with this question of gold 
monometallism, Mr. Chas. S. Devas, in his "Political 
Economy," page 281, sa^s: "And why is there such dis- 



82 ESSAYS IN POLITICAL ECONOMY. 

tressing violence in the discussion? This is because the 
interests of different nations, classes, and persons, are 
at variance. There is first the fact that the rise of the 
exchange value of gold in recent years is a gain to England 
in general as a great creditor country receiving interest 
reckoned in gold from half the world, and a gain in par- 
ticular to the bankers and financial houses of London as 
the holders of innumerable mortgages. On the other 
hand, such debtor countries as have to pay in gold the 
interest of their debts, and the debtor classes of the United 
Kingdom, notably the landowners, suffer by the fall in 
prices." 

When he asks why is there such distressing violence 
in the discussion we may say that Cardinal Manning wrote 
that he had no patience with Professor Huxley for hinder- 
ing General Booth in the work of giving food to the poor. 
We cannot converse about widespread suffering of the 
working people, as though we were at a conversazione and 
nothing at all the matter. We may ask is robbery of the 
rich few any more detestable, when effected, by arbitrary 
expansion "under form of law," than the robbery of the 
toiling millions when effected by arbitrary contraction 
"under form of law.'" 

Let us consider the evidence or facts, cited by an 
amiable non-Catholic English writer, in regard to a part of 
the contraction scheme which has been systematically 
carried out for half a century. We may, then, perhaps, 
be exonerated from the charge of undue partisanship in the 
statement of facts. 

Professor Fawcett, M. P., of Cambridge University, in 
his "Manual of Political Economy," on page 482, quotes 
Cairnes and Jevons as authority that gold depreciated in 
value after the gold discoveries of California and Australia. 
They .estimated the depreciation of gold- at ten or fifteen 
per cent. But the exact figure is not the point, here. If 



ESSAYS IN POLITICAL ECONOMY. 83 

gold did not depreciate after such an enormous increase of 
the supply, then gold would have proved itself the excep- 
tion to the cardinal rule of commerce which Mr. Cobden 
gives in his preface to the work of M. ChevaHer, already 
quoted in these papers, that an increase in the quantity of 
a commodity must reduce its value. If gold did not depre- 
ciate, then our opponents need no longer be afraid of an 
increase in the quantity of money which is proposed in the 
free coinage of silver. 

Professor Fawcett writes on page 479: "Just prior 
to the discoveries in Australia and California, the annual 
aggregate yield of gold was not more than fifty million 
dollars. This amount was, however, at once trebled by 
the additional gold obtained from Australia and California, 
for during the five years between 1852 and 1857, no less 
than fifty million dollars of gold was annually yielded by 
each of these countries." 

Now, one would suppose that this increase in the sup- 
ply of gold would be hailed as a blessing by the prejudiced 
advocates of the "gotd basis" and by those who thirst for 
"an influx of capital." But far otherwise was the fact. It 
is easy to see from what has already been said as to the 
benefit to bond-holders arising from contraction, that they 
would not be pleased at this unpardonable inflation of the 
currency by Dame Nature. Of course, we must suppose 
that Dame Nature was, therefore, guilty of one of the 
"most detestable robberies" which have disgraced this age. 
The effect was, precisely, the same as would be the effect 
of the inflation of the currency, by inconvertible govern- 
ment paper money. 

Here we may observe, as to the difference between 
"convertible" and "inconvertible" paper. Convertible 
paper is credit; inconvertible paper is not, it is the redemp- 
tion of credit. Cre?dit is not a substitute for money as is, 
curiously, supposed. Credit is a demand for money — and 



84 ESSAYS IN POLITICAL ECONOMY. 

an imperative demand, which must be redeemed in money. 
Credit intensifies the strain and the demands for money, 
and is not a substitute for money. A demand for a thing- 
is not a substitute for a thing. On the contrar}- a new 
demand for a thing tends to make that thing more difficult 
to obtain. Hence "convertible" paper is just the thing 
which should not be issued. 

Professor Fawcett relates, on page 491: "Some have 
considered, that if the fund-holder's property should be 
depreciated in the manner just described, they would have 
a legitimate claim for compensation from the nation. 
Such a claim would be more plausible, if gold- had been 
depreciated in value so suddenly that it was impossible for 
any one to take timely warning. The claim, however, 
under present circumstances, would be manifestly indefen- 
sible; for the possibility of a depreciation in the value of 
(] old has been discussed and predicted for the last twentij 
years!' (Mark well, here, the full advertence before the 
deliberate act.) 

How Professor Fawcett could regard the claim for 
compensation as "plausible" under any circumstances, in 
view of the fact, that the inflation was nutaral, is a puzzle. 

For, here, the inflation was not caused by the arbitrary 
act of a government; but, by the arbitrary, impertinent, 
meddlesome, dishonest, act of dame nature. 

But, Professor Fawcett relates how Nature took com- 
passion on the poor distressed bond-holders and came to 
their relief; and the bond-holders and their allies did the 
rest themselves, when, after "twenty years" of discussion 
they saw, exactly, what was the matter; and the remedy, 
available to relieve them, from the "robbery" of natural 
depreciation. For, then, came enormous development of 
railroad systems, of ocean steamers, and of commerce, 
everywhere. Are there no such opportunities now, instead 



ESSAYS IN POLITICAL ECONOMY. 85 



of the wasteful and destructive wars which are now being 
planned? 

That absorbed much of the new suppl}^ of gold, very 
fortunately. Then, we read: "Soon after the Indian 
Mutiny there was a large and continuous export of silver to 
India. In some years the amount exported was not less 
than thirty-five million dollars. This was more than the 
new product of gold. Then no less than four hundred and 
fifty million dollars was raised in England for Indian rail- 
ways ... it has, in fact, been ascertained that great 
quantities of silver were taken from the currencies of 
France, Germany, and other continental countries, to sup- 
ply this export to the east. The void thus created in the 
silver currency was to some extent filled up by the more 
extensive use of gold, and b}^ the issue of a paper currency 
of small value. This increased use of gold indicates an- 
other source of absorption of the additional supplies which 
were obtained from Australia and California." 

The bond holders and their friends having thus learned 
a lesson, profitable to themselves, proceeded to act upon 
it without much unnecessary delay; and the deliberate, 
arbitrary, and dishonest, acts of various governments, may 
be related in the impartial words of Mr. Fawcett, who was 
a champion of gold monometallism: "There seems to be 
every probabilit}' that silver will in future be much less 
used for the purposes of currency by various European 
countries than it has hitherto been, and that as gold will 
take the place of this silver, an additional demand for gold 
will thus be created. Germany has, for instance, within 
the last few years demonetized silver. A considerable 
portion,, of her small note circulation has also been called 
in, and she has since 1871, purchased no less than three 
hundred and fifty million dollars, of gold, to take the place 
of the silver and the notes which have been withdrawn 
from circulation. In 1865 France, Switzerland, Italy 



86 ESSAYS IN POLITICAL ECONOMY. 

Belgium and Greece, formed a combination which is 
known as the Latin convention, and they subsequently 
agreed that for some time to come they would greatly 
restrict their coinage of silver. There can be no doubt 
that a considerable amount of additional gold has been 
employed in place of silver which would have been coined 
and circulated, had not this agreement been entered into. 
Holland has recently decided to adopt a gold instead of a 
silver standard. She will also require a large amount of 
gold to affect this conversion of her monetary standard. It 
seems not improbable that many other countries, even if 
they do not demonetize silver, will considerably diminish 
the amount of their silver coinage, and thus an additional 
demand for gold will be created." 

Now by the confession of the gold men, nay by their 
complaints, it is perfectly clear that such stupendous, 
arbitrary, changes in the monetary systems of so many 
countries must have the gravest consequences to the 
working people. Is there no law of justice above the 
rulers of the world, to bar the path of this advancing 
infamy.'' We know there is and we appeal to it. "May 
God arise and may His enemies be scattered." The 
enemies of God are the enemies of the working classes. 

After all this, came the demonetization of silver by the 
United States in 1873. And, now comes Austria last year, 
to demonetize silver, and thus an additional demand for 
gold has been created. And, now comes India this year 
to close her mints against silver, and thus an additional 
demand for gold has been created. 

No wonder that gold should have become enhanced in 
value, or market price. No wonder that silver should have 
been depreciated in its market price estimated in gold. 
No article, not even gold, can retain a market price if all 
nations conspire to cease buying it and sell it, or offer it 
for sale, in fabulous masses, as is the effect of wholesale 



ESSAYS IN POLITICAL ECONOMY. 8/ 

demonetization. The most worthless article at present 
would acquire an enormous value or market price, if 
limited in quantity, and all nations conspired to buy it. 
If nature now conspired to produce five times the present 
supply of gold, none would curse more loudly than the 
gold men. Their outcries would be something awful if, 
furthermore, all .nations conspired to cease buying gold for 
coinage, or in other words, demonetized gold, and then 
offered it for sale in huge masses. For what, then, would 
become of the value or market price of gold.^ In plain 
words, gold would then procure a very small quantity of 
other commodities in comparison to the quantity which it 
can now procure. It would be perfectly futile to deny that 
the bond holders and great capitalists, everywhere, de- 
nounce, as robbery, through their hired "claqueurs," any 
attempt to expand the currency. It is well that this accu- 
sation IS so publicly, and so universally, made, for they, 
the bond holders, are, now, left without an answer to the 
proposition that, therefore, contraction of the currency, 
was robbery. For it could not possibly be that expansion 
would take from them unjust gains, unless contraction, 
per contra, would give to them as much, and more. The 
bond holders are proved to be the direct beneficiaries of 
"contraction." Whether done through gross ignorance, or 
through fraud, is another question. 

Here let me observe that it may be said that I should 
soften my indictment, make myself "persona grata," try to 
be more pleasing to the world. It has been said! To that 
I reply that the "man and his ass" fable is a caution; for 
he tried to please and disgusted everybody by want of fixed 
principles. A man could enter upon no more dangerous 
course, I, verily, believe. Let him write for truth and jus- 
tice, and not for the sole purpose of trying to please at any 
cost. It is this inordinate desire to please, to be pleasing 
to the world, which is at the root of most of the infidel 



88 ESSAYS IN POLITICAL ECONOMY. 



writings of our day, and not, so much, a malicious rebel- 
lion against God. There are some who are malicious and 
fierce; and the others write, in abject fear of denunciation 
by rabid infidels; and then the jelly fish writers call this 
miserable dishwater "charity" — to give themselves the air 
of dignity. But they fail to be dignified. They are utterly 
contemptible. An inordinate desire to "stand in" has 
often led men, without perceiving it until too late, to 
become participators in conspiracy. It has always been 
the most fruitful parent of lies. True charity will defend 
the oppressed with the sword of truth, more powerful than 
armies, and it will prevail. 

Mr. Ernest Seyd, in his work "Bullion and Foreign 
Exchange," page 41, writes: "During the height of a 
commercial crisis the bullion of the bank generally falls 
very low, which naturally leads to a panic in the money 
market, attended with great commercial distress. From 
their suddenness and severity (and very sudden and severe 
it must be admitted they are) these events cannot but 
exercise a most adverse infiuence ujjon the general 2)ros- 
perity of the people. This subject would involve a long 
discussion on the bank act, for which, however, we have 
no space to spare here." 

Now considering there is question of "the general 
prosperity of the people," he might, without loss of dignity, 
have spared space, and a great deal of space. We have, 
elsewhere, said that bullion is shipped when it pays, or 
suits the shipper to ship it. 

It will be well, then, to consider upon what slight amount 
of percentage so much depends; for, with gold monomet- 
allism, it depends on the premium on bills of exchange 
drawn on foreign cities, whether gold shall be shipped or 
not,- and upon that, again, depends whether a country 
shall have a "panic," with all its horrors, or not. It is the 
bullion brokers who, chiefly, do the business. Mr. Seyd 



ESSAYS IN POLITICAL ECONOMY. 89 



says, page 256: "The banker or merchant has simply to 
receive or to pay the money, and to verify the accounts 
made out by the broker. There are many houses in Lon- 
don who in the course of their career, have dealt in many 
milhons' worth of bulhon through the agency of brokers, 
without even having seen any of their property." 

While we can not agree with the reasoning of Mr. 
Seyd, in his first chapter on the "medium" of exchange, as 
he calls money, the reports and figures, which he copies 
into his work, are more useful than his sarcasms are 
effective. 

On page 257, he gives, "Rates of Freight and Insur- 
ance for Bullion" from or to London : 

Freight Insurance 

i For sums between £800 and £4000 
Paris- —for every £100 4s 'Td 

/ For sums above £4000 4s 1-10 per cent 

Boulogne 1 

Calais | ^^^ ^^^^^ ^^ £gQQO y^ per cent 

Antwerp r For sums above £5000 MC " 1-10 " 

Rotterdam 

Hamburg J * . ,< 1/ *' 

St. Petersburg /s A 

Madras i 

Bombay - 3 '• /z 

Calcutta ) ,, II 

Hong Kong : 2X " M 

Shanghai ''^'A " \ 

Australia 2 " 1 

Ne'w York — p(n- Cunard Steamers — 

Up to 10,000 Vi 

" 30,000 ^ '■ "X 

" 50,000 3-10 " 

Above 50,000 M " T >i 

California 1^ " ^ 

Panama— bv Roval Mail Steamers- 
Gold.' IX 

Silver 1^ ;; ^ 

Valparaiso — Gold 2X " 

Silver 2>^ " 1 ;• 

Rio Janeiro Ij^ and 1 " % 

Ca])e of Good HojH' 1^ to 2 H ^" X 

Mauritius 2 to 2>^ '• Y^\o% 

* In summer, f In winter. 

The rates of freight are exclusive of the usual prim- 
ages; the rates of insurance include^ discount and com- 



go ESSAYS IN POLITICAL ECONOMY. 

mission. The competition between rival steamer lines 
sometimes reduces the rates of freight on the Pacific side 
to one-fourth per cent." 

Professor Sumner says in his "History of American 
Currency" that it is "a fundamental law" of finance that 
"each nation will have just as much gold as it needs." He 
says this "law" is established by the British Bullion Report 
of 1810, and, in fact, he adds that the British doctrines 
"have been established as the basis of finance — they have 
passed the stage when the scientific financier is bound to 
discuss them." 

Well, after having 24 years banking experience, and 
20 years study of Political Economy, I still feel bound to 
discuss them, and to say that it is precisely because each 
nation would not have as much gold as it needs that each 
nation adheres to artificial means. 

England herself, France, Germany, Austria, Russia, 
and the United States, as long as they cling to the gold 
standard to the extent now existing, would not dare to 
trust themselves to the doctrine that each will have as 
much gold as it needs, by dispensing with their present 
arbitrary, restrictive, artificial means for obtaining, and, 
if possible, retaining, as much gold as each nation needs. 

The old mercantile theory has received a very fair trial 
under the McKinley Bill, yet that powerful artificial means 
has not been able to retain "as much gold as the nation 
needs" or to prevent an enormous outflow. 

It would not be easy to imagine any theory more 
directly, and glaringly, opposed to the evident truth than 
the so-called "fundamental law" of the British Bullion 
Report. But it is easily seen at a glance that Professor 
Sumner's so-called History of American Currency is chiefly 
a glorification of the stupid British Bullion Report, as "the 
basis of finance." 



ESSAYS IN POLITICAL ECONOMY. 9 1 

And now let us look at results in a nutshell. Credit 
is contracted all over the country; not because credit was 
unwisely extended; but because a few men in New York 
thought fit to buy bonds from Europe which turned the 
balance of trade, and a few other men thought fit to ex- 
port gold. Then the law steps in and checks credit. How 
stupid ! ! ! 

Furthermore, it is easy enough to see that laws which 
require gold reserves to be kept by the banks, although on 
the plausible ground of protecting depositors — which, by 
the way, they do not accomplish — such laws have for 
effect to "corner" and thus to enhance the value of gold, 
as though so much gold had been thrown in the sea, thus 
reducing the available supply in the open market. 

If" all nations were now to conspire in passing laws to 
require the bank reserves to be doubled, no matter what 
the pretext, the effect would be an absolutely insupportable 
enhancement of the value of gold. 

On the other hand to coin and issue for circulation 
one billion dollars in silver would really have the same 
effect as if a gold mine were discovered producing that 
amount. Then the value of gold would be lessened along 
with the value or market price of silver relatively to com- 
modities but not relatively to each other. For we must 
remember that when gold and silver have been coined and 
put in circulation, they have been sold by the owners of 
the bullion, and bought by the nation. In like manner an 
inconvertible paper when issued by government has been 
sold by the government and bought by the nation. And 
all three, gold, silver and paper money, are evidences of 
debt paid by the nation, and not evidence of a debt due. 

From all this, it is quite manifestly a criminal proposal 
to speak of issuing gold bonds, causing a huge increased 
demand for gold, under the lying pretext of maintaining 
the parity of gold and silver. It must needs effect the 



92 ESSAYS IN POLITICAL ECONOMY. 

contrary. It is as plain as the noonday sun that since 
silver has been lessened in value estimated in gold, it is 
silver bonds which should be issued and offered for silver, 
in order to restore what is called the parity of silver with 
gold, which was destroyed by criminal legislation, and it 
matters not who the criminals were, it is solely with the 
effect we have to deal. 

We have seen for thirty years that American policy 
has been directed with a view to securing the free negotia- 
tion of "our securities" in Europe. But Europe really 
means London, when we speak of finance. 

He must be a very raw. student of the politics of the 
world in this century, who does not perceive that London 
has Europe, financially, by the throat. Her control of 
Spain, Portugal, and Turkey dates bapk six'y years." 

Her control of Austria is visible in the recent issue of 
gold bonds. Russia, even, is subject. All these powers 
may go to war; but they must regulate their finance to suit 
London. 

It is no longer the Monarchy, or the Nobles, or the 
Press, or the Democracy, who control nations. It is the 
great financial body which now rules. But the ruling 
financial power is London. 

To fear to take a certain course because it will dis- 
please God, is to be controlled by God. To fear to take 
an independent course because it will displease London is 
to be controlled by London. To fear to take a certain 
course because it will displease the American people is to 
be controlled by the American people. 

No doubt, it may be said, by the claqueurs, or Richo- 
gogues, as opposed to demagogues, that, after or under the 
Banking Law, things prospered. 

The claqueurs who, like Voltaire trotting around at the 
heels of Fredrick of Prussia, cling to the coat tails of the 
rich until the orange has been squeezed and the skin 



ESSAYS IN POLITICAL ECONOMY. QJ 



thrown away, they have only fallacies for stock in trade. 
A favorite fallacy is post hoc ergo jpropter hoc: after the 
Bank Law prosperity, therefore the Bank Law caused pros- 
perity; after the tariff prosperity, therefore the tariff caused 
prosperity; after the clerk stole five thousand dollars a 
year for ten years, the merchant quadrupled his business, 
therefore the steal quadrupled the business of the merchant. 

But things did not go on well under the operation of 
the Bank Law. It was when the Bank Law was not in 
active operation that things went well. But whenever 
the Bank Law begins to operate actively then the nation of 
sixty-five millions of people, and all Europe besides, are 
thrown into a fever of preparation for the faithful perform- 
ance of what is absolutely impossible. This is the climax 
of absurdity! 

A law is no law which requires the impossible. It is 
simply an "enacted" absurdity! 

For more than a generation we see this everlasting 
humiliation placarded by the press before the whole 
American people: "If we do not keep to the gold standard 
Europe will not buy our securities." The truth straight- 
forwardly is "London will not buy our securities." And 
there are men who now make the criminal proposal to 
issue gold bonds, and they seem to glory in their shame. 

What is this but to be controlled by London more 
effectively than if Lord Salisbury resided in Washington, 
directing the affairs of the American government. 

Let London unload our securities at thirty cents on 
the dollar if she wants to. Let us issue currency to meet 
it. This is not repudiation. If London wants one hun- 
dred cents let her hold "our securities" until due. 

One of the most interesting episodes in the recent 
congressional battle over the silver bill of 1890, was a 
declaration by a member of congress that the appreciation 
of gold is a benefit to the workingmen. He argued that 



94 ESSAYS IN POLITICAL ECONOMY. 

the authority he presented was unimpeachable and showed 
that workmen's wages had increased in nominal amount, 
and that the appreciation of gold was equal to a further 
increase in wages. 

This theory is certainly interesting. It is startling in 
its audacious challenge. Indeed it is quite sensational. 

It has, however, serious defects. 

It assumes that the increase of burdens must be a 
benefit to the nation. Consider, that we have the burden 
of four hundred millions for national revenue, and about 
as much more for the states. All, then, that we require is 
to double that burden, and then to appreciate gold to twice 
its value, and by that means our burdens would be quad- 
rupled. What a simple panacea that is, to be sure. 

Then we have only to appreciate gold ten fold, and 
then to multiply the revenue ten fold and — Behold! The 
millennium! 

But can we not be a little merciful, since he had a 
"brief" for his clients, and tried to do his best.' Can we 
not say that at least it would be a benefit to the workmen 
to have the purchasing power of their wages increased.' 
Alas! truth forbids. The simple theory has the fatal 
defect of assuming that manufacturers, merchants, and 
productive capitalists, generally, would highly enjoy having 
to sell twice, four times, ten times the goods ne.xt year 
which they sold last year in order to procure the same 
nominal amount of money, so that they might pay the 
same wages. And then the theory assumes that the capi- 
talist would be able to sell these increased quantities, and 
could afford it, and afford to pay the same wages in appre- 
ciated gold. The honorable congressman must try again. 

Now, it is manifest, that modern bonds have in- 
troduced an entirely new element, and new conditions, 
into civilized society, in this century, with which the world 
had not to deal before. 



ESSAYS IN POLITICAL ECONOMY. 95 

We have seen that the pubhc debt of nations has in- 
creased in one hundred years from three bilHon dollars in 
1793 to thirty billion dollars in 1889. Of this fabulous 
sum eighteen billion dollars were for war and armaments. 
Then, the capital of railways has been increased from 
three hundred and fifty million dollars in 1840 to twenty- 
eight billion dollars in 1888. 

In addition to this we have an enormous extension of 
the credit system, which cannot be estimated. This 
credit is sometimes called a substitute for money. Is that 
view quite true.^ And to what extent.? Credit, certainly, 
is a medium of exchange. Exchange of what.? Exchange 
of commodities for money, and money for commodities. 

Credit is the postponement of exchange, and facilitates 
the exchange of money for commodities, and thus is a 
medium of exchange. But is this postponement of ex- 
change, is the medium of exchange a substitute for the 
thing exchanged.? It does not seem so. 

But may not credit be looked upon as a demand in 
abeyance for either money or commodities.? Goods are 
sold and credit is given. Money must be paid, eventually. 
That is imperative. The money supply is then admon- 
ished to be prepared for a new and imperious demand. 

But to increase and to swell the ravenous demand for 
a thing, is not to provide a substitute for it. 

Now, bonds are a form of credit. They are not pay- 
able for a long time. But, under one aspect, they are paid 
in full when they are imported into a country in the course 
of modern exchanges. They are paid for by a country when 
they are not due. Of course the person who imports the 
bonds might say, indignantly, that the country had noth- 
ing to do with the transaction at all. Quite true, under 
one aspect. But under another aspect the country is con- 
cerned to study and to ascertain, as far as may be, the 
effects produced upon the country by any process which 



96 ESSAYS IN POLITICAL ECONOMY. 

takes place in trade and commerce. Thus it is that when 
private individuals, in the exercise of their undoubted right, 
import goods, we say that the country has paid for those 
goods by exporting goods or money. 

If then England, in the first instance, lend, through 
stock exchange operations, one billion dollars to the 
United States, and after some time the bonds be imported 
by Americans, then England has done no service. She 
has floated bonds at a discount, and is paid at a premium, 
long before the bonds are due. America has loaned money 
to herself. England has "got the best" of America. 

- There seems to be no way by which we can stop, 
directly, this process carried on by individuals. 

We see that in spite of the effort of despair, "the 
McKinley Bill," we have imported more merchandise than 
we exported. But it may be argued that if it were not for 
the bill we would have imported much more. There is 
some truth in that. Here is the case. The republicans 
say that they know for sure that if we lower the tariff we 
will import more foreign goods; and they fear it. The 
democrats say that they know for sure that if we lower the 
tariff we will import more foreign goods; and they rejoice 
at it. Who is there, then, left to deny that if we lower 
the tariff we will import more foreign goods.^ There is no 
one left. 

But we must pay for what we import, either in com- 
modities, bonds, bills of exchange, or gold. Under free 
trade, gold will certainly be shipped, whenever it suits the 
shippers. There is no doubt about that. But the gold is 
required here at the same time, not merely as a conven- 
ience, but as an absolute, indispensable necessity required 
by law. 

What are we to do in such a predicament.^ 

The protectionists would seem to be the more con- 
sistent, if we are to have a gold basis. They say the gold 



ESSAYS IN POLITICAL ECONOMY. 97 

basis we must have. But long practical experience has 
shown beyond all doubt that gold will go out under unre- 
stricted or free trade. We must then have some restric- 
tion. We must either have the bold and open direct 
restriction of high tariff, or the covert and indirect restric- 
tion of the English Bank Act of 1844. Perhaps the free 
traders can invent some other restriction, to show that the 
gold basis does not logically necessitate protection; but, 
alas, if they adopt a restriction, what becomes of free 
trade.? 

But the protectionists are defeated in this — that, 
while under free trade gold must go out, under protection 
we have seen gold go out just as surely as ever — and a 
"panic" to "boot." 

So that from the arguments of both parties we can- 
not, even if we would, have a gold basis without ever- 
recurring disaster. 

And, a fortiori, we should not have a "convertible" 
government paper, redeemable in gold. Our proposition 
may be formally stated thus: i. A ravenous demand for 
money is not a substitute for money. 2. But credit is a 
ravenous demand for money 3. Therefore, credit is not a 
substitute for money. 

Let us bear well in mind that, no matter what material 
may be adopted for legal money, any and every kind of 
money must be paid for. To pay for money is to give 
commodities in exchange for it. If a nation which has no 
mines of its own requires metallic money, it can only 
obtain the metal by paying or exporting other commodities 
for it, or by exporting bonds. To obtain metallic money 
in this way is manifestly a tax in the first instance. But 
the uses to which this money is afterwards put, the things 
which money does, are advantageous or profitable, as all 
those things which facilitate commerce are profitable. 
Thus the money raised by public authority to build useful 



98 ESSAYS IN POLITICAL ECONOMY. 



roads and harbors, is, in the first instance, a tax pure and 
simple, but by the advantages afforded to trade, the tax 
then becomes an investment. Such a tax differs essen- 
tially from a tax for war or armaments, or from a tax for 
providing sinecures in the public service, for favorites, or 
for favored classes. Such taxes are the only real taxes. 
All levies for the maintenance of the peace, or for the 
necessary administration of the government, may be said to 
facilitate commerce, and, therefore, to be profitable, in so 
far forth as they avert a loss which must otherwise neces- 
sarily occur; and we think it fair to infer that there is also 
some direct profit which cannot be estimated in exact 
terms. It may be argued, and, in point of fact, the argu- 
ment has been made, that some war is profitable, and, 
therefore, not strictly a tax, such as the wars in the early 
part of this century in which England was engaged. But 
it is doubtful whether the losses have not exceeded the 
gains, largely. 

In the case of a nation which has its own mines, it 
seems plain enough that to obtain such money metal as we 
are speaking of, is, to a great extent, also, a tax in the 
first instance, and then becomes an investment as already 
explained. 

To buy money in this way seems precisely the same, 
in effect, in the first instance, as the tax for making bridges 
and roads, which tax becomes, also, an investment, if 
judiciously expended. To export the precious metals from 
the country, then, would, clearly, seem to be the most 
complete repayment by obtaining commodities in ex- 
change from other countries. But, here, we are met with 
a difficulty. Money is needed at home. And, we are sup- 
posing the money to be metallic. It is, then, clear that, 
while the metal is paid for in commodities, the needed 
convenience is gone. 



ESSAYS IN POLITICAL ECONOMY. 99 



It is as if a farmer bought a horse for fifty dollars, to 
plow his field, and then sold the horse for fifty-five dollars; 
he would be as rich as he was before he bought the horse, 
plus five dollars, but he would have no horse to plow his 
field, and the work would stand still, and that might mean 
a very considerable loss. 

And the awkwardness would be very plain, indeed, if, 
in the case above named of a tax for roads and bridges, the 
roads and bridges were to be taken up, and to be exported, 
after they had been bought and constructed, at great 
expense, with a view of facilitating commerce. 

It would seem, then, plain enough that when money- 
metal has been once obtained, that it must be a loss, for 
some time, to export it, because an instrument needed every 
day is taken away, until the purchase be made over again. 
And, perhaps, the price, in commodities, paid for the 
second importation of money-metal, may be greater than 
in the first instance. If, then, a practical and efficient 
substitute for metallic-money can be found, it would seem 
almost obvious that, instead of a scramble to obtain gold, 
the wise nations ought to export all they have while there 
is a market for it and thus obtain a real and an enormous 
profit. The illustrious John Stuart Mill seems to have 
admitted this truth and then he failed to follow it up. 
For, we read, in book III, chapter XIII, section V, page 
334, (peoples' edition) of his "Principles of Political 
Economy": "There is no way in which a general and per- 
manent rise of prices, or in other words, depreciation of 
money, can benefit anybody, except at the expense of 
somebody else. (N. B. — We need not accept this.) The 
substitution of paper for metallic currency is a national 
gain; any further increase of paper. beyond this is but a 
form of robbery." 

Here this illustrious man commits the same fault as 
other recent writers, of using violent language towards 



lOO ESSAYS IN POLITICAL ECONOMY. 

those who oppose the gold men. We may, however, over- 
look that, and quietly deny that every issue "beyond this" 
is, necessarily, "a form of robbery." As for instance, 
when it reverses a glaring robbery. Just a little beyond 
might, perhaps, be allowed. It may also be considered as 
a simple tax. To issue paper money, or gold money, or 
any money at all is a tax, in the first instance, as we have 
seen. 

It appears to be generally conceded that to merely 
substitute paper for metallic money makes no change in 
general prices. It is thought that only when the issue of 
paper exceeds the mere substitution that general prices 
rise, or money depreciates. 

But we do not want to be understood as encouraging 
any shovelling out of money, merely to hurt a particular 
class, and not caring who else we may hurt at the same time. 

A depreciation of five per cent, or a rise in the price 
of commodities of five per cent, would be simply another 
form of income tax. But there is this vast difference. 
An income tax is inquisitorial; it can be, and it is always 
evaded; and it is the proximate cause of much fraud and 
of reckless perjury. 

A tax by expansion of the currency is not inquisitor- 
ial; it cannot be evaded; and fraud and perjury — the 
special accomplishments of the monied classes — are not 
required by it; a man might perjure himself black in the 
face but he could not evade the tax. 

There is still another point that may be worth consid- 
ering. Take the case of a country which owns its mines. 
Let 4 represent the tax to be paid to the government, in 
gold. Let lo represent the produce, in the country, out 
of which the gold has to be bought. Remember, that 
when the government coins money for those who bring 
metal to the mint, or coins money which it has bought 
itself, and when that metal, so coined, has been put into 



ESSAYS IN POLITICAL ECONOMY. lOI 

circulation, for value received, then that country has 
bought the metal. Now, 4, the tax to be paid, is taken 
from 10 to pay for the gold which is then delivered. We 
have then produce 6 plus gold 4. The gold 4 is then paid 
over to the government for taxes, and, by government, is 
given or paid over to public servants, and they bring the 
gold 4 to the producers, and demand produce which is 
given. We have, then, produce 2 plus gold 4. 

But, now, let us suppose another course of trans- 
actions. Let 10 still represent the produce. And let the 
government hand, to the public servants, paper stamped 
^'■legal tender for i." The publrc servants, then, bring 
this paper, as they brought the gold before, to the produce 
supply, and obtain produce as before. Then we have 
produce 6 plus paper 4; and the paper 4 passes current 
from hand to hand like the gold before. But the public 
tax and public servants are paid, and we have paper 4 
equals gold 4, and, besides, we have produce 6 instead of 
produce 2, as in the other case when gold v/as used. So 
that we have three times as much produce left, as we had 
with gold money. 

To abstain from taking gold 4, when gold mone}^ is in 
circulation, and, when gold 4 would, otherwise, have to be 
paid, and to issue paper 4, seems equal to a sudden in- 
crease of 8 in the circulation. And, therefore, caution is 
very necessary. This is not a panacea, for, mark it well, we 
do not promise the people any substitute for their return to 
the obedience they owe to God. Without that return to 
their obedience to God, they can have no peace. Those 
who promise the people otherwise, mock the people in 
their suffering, like devils from hell. 

To say this does not condone the crime of the finan- 
ciers against the laboring people, nor obscure the truth 
that oppression of the poor and defrauding the laborer of 



I02 ESSAYS IN POLITICAL ECONOMY. 

his hire, through legislation, or otherwise, are crimes 
which cry to heaven for vengeance. 

It does not seem quite the same thing to issue paper 
4 in the case of a new tax for public profitable works. 
Because the public would not, in this case, have made 
preparations to pay gold 4, and would not then be told — 
to retain gold 4 and that paper 4 would be issued. The 
effect, then, would seem to be only equal to an increase of 
4 in the circulation. In proposing, then, to exceed the 
mere substitution of paper for metallic currency, we ought 
to propose it as an income tax, and to moderate it ac- 
cordingly. ^ 

Let it be well understood that such an increase meant 
an income tax, and the justice and good sense of the 
community would oppose any violent or excessive inflation. 

The public ought to be well satisfied to be rid of the 
danger of panics, to a great extent, for such panics are 
caused, chiefly, by an exportation of gold, the fear of a 
consequent scarcity of gold, the consequent contraction of 
credit, a sudden rush for gold which cannot, possibly, be 
obtained, in sufficient quantity, to meet all demands, at 
once, in all places. Hence, come crashes, and failures, 
and pitiable distress, and thousands of men are thrown 
out of work in various countries, caused, in great part, by 
the fact that gold has been made the only legal money, by 
arbitrary and unjust legislation. 

Now, since it may be claimed, since, in point of fact, 
it has been and is claimed now, that gold is a financial 
requisite, if we are to trade with the rest of the world; 
and whereas, the exports of gold are ascribed to for- 
eign demands, and to an adverse balance of trade; 
therefore, we may well devote some consideration to this 
branch of the subject, and endeavor to explain ourselves 
in simple popular language. 



ESSAYS IN POLITICAL ECONOMY. IO3 

What is this terrible balance of trade which alarms 
people so much and so often? And who figures up the 
balance, and what has the nation to do with it? What 
public officer figures the balance of trade? None. For 
none could do it. No public officer or private individual 
can ever tell what private exports of bonds and other re- 
mittances are going through the mails. 

In ordinary conversation, the balance of trade is 
intended to signify the difference between the imports and 
the exports of merchandise. Is it not so? But this ordi- 
nary conversation is an ordinary error. 

Let us take the "balance of trade," as they call it, 
from Martin's Statesman's Year Book. In the decade from 
1873 to 1882, the United States imported merchandise to 
the value of $5,572,459,701; and exported merchandise to 
the value of $6,719,458,759; showing a balance of mer- 
chandise exported $1, 146,999,058. 

Well! did the United States, accordingly, import over 
a billion of gold? They certainly did not. Here are the 
exact figures: Exports of specie from 1873 to 1882, 
$487,605,449; imports of specie from 1873 to 1882, 
$423,740,665; excess of exports, $63,864,784. 

Now take from the same book the so-called "balance 
of trade" for England. Total imports, for same decade, 
$18,897,961,650; total exports, for same decade, $13,- 
958,672,355; apparent "balance of trade" against England, 
$4,939,288,295. 

Thus England with an apparent "balance of trade" 
against her, imported gold; but the United States with an 
apparent "balance of trade" in her favor had to export, 
or rather did export gold. 

It was not necessary to export gold. The export of 
bonds, wheat, and bills of exchange would have been just 
as good. If any man wants to pay gold in London he has 
only to send over there bills, or bonds, or wheat, or some 



I04 ESSAYS IN POLITICAL ECONOMY. 

other commodities, and direct the person to whom they 
are sent to pay the money into a bank named in London, 
and then a check can be sent to the person to whom pay- 
ment is to be made and he can present the check at the 
London bank, and the chances are about a milHon to one 
that then the person will not take gold when he can get it. 

The reason why gold is sent is because an American 
exporter, in New York, does not care whether the whole 
United States goes to destruction so long as he can save 
a little percentage. 

But where there is real necessity to pay abroad, means 
can be found by paying enough commission here, and the 
export of gold is not a necessity. 

Professor Fawcett explains the process as follows: "If 
this expense, of transmitting specie, were two per cent it 
would of course be to the advantage of the English mer- 
chants to purchase bills in France, even if they paid one 
and a half per cent premium for them; if bills were bought 
at this premium it would be cheaper by half per cent to 
make payments to France by means of these bills, instead 
of transmitting specie, which involves an expense of two 
per cent. English merchants, therefore, will compete for 
the purchase of bills drawn on France, and thus competi- 
tion will inevitably raise these bills to a premium which is 
approximately equivalent to the expense of transmitting 
specie to France. The premium on bills cannot exceed 
this amount, because if it did so, then it would be cheaper 
to transmit specie than bills." 

This shows that English exporters of gold are no 
better and no worse than Americans. They are both 
actuated by the same motive, their own individual gain, 
no matter what it might cos^ the nation. 

Thus the whole commerce of a mighty republic of 
sixty-five million people must be shaken to its foundation 
to suit the affairs of a few paltry dealers in New York, and 



ESSAYS IN POLITICAL ECONOMY. IO5 



the theories of musty doctrinaires. What a magnificent 
system! 

This country is rich, but the toiling millions of Amer- 
ican citizens can not stand this terrible, everlasting strain. 
They must needs uprise against it. England is enabled to 
draw from America a tribute such as she could never exact 
by war. 

Further, the adherence to the gold basis entails the 
robbery of high tariff until some other means can be 
devised to maintain gold reserves. 

For with freedom of trade, by ordinary "economic 
law," gold would, naturally, leave the country, whenever 
shippers saw a greater profit, even though small, in send- 
ing away gold to Europe, rather than pay premium on 
bills of exchange drawn on London, Paris, Berlin, and 
Vienna. 

But, the American law says, practically, that gold 
must not go out in accordance with economic law, and 
requires one hundred millions reserve in the treasury — a 
stupid waste — and some three hundred millions more to be 
kept as reserve in banks, and furthermore, that all debts 
must, eventually, be paid in gold, for which purpose gold 
must be kept here. 

Thus economic law, and American law, are in hourly 
conflict. 

And this whole arrangement exists at the dictation 
of a clique of financiers whose dictation should not and 
need not be tolerated by a self respecting and independent 

people. 

But the existing strain in America and in Europe, 
which has been with us for ten or fifteen years, more or 
less, must continue if the system is tolerated. It involves 
even the question— are the people to rule this country or 
not.^ Behold in a world-wide slavery the fruits of so- 
called modern enlightenment! It was not the church 



I.o6 ESSAYS IN POLITICAL ECONOMY. 

broug-ht this slavery, for the church has ruled no country 
for over a hundred years. 

Gold must still more and more appreciate; until the 
arbitrary and fraudulent legislation, which is responsible 
for the appreciation of gold and the depreciation of silver 
has been reversed. 

The demonetization of silver; the Baring Bros, and 
Argentine trouble; the bank failures in Australia; the 
enormous armaments and preparations for immediate war 
in Europe; the closing of the India mints to silver; and 
the demand of Austria for gold, by the issue of one hundred 
and eighty millions of gold bonds, are the causes of the 
appreciation of gold, and the strained financial condition. 

And yet there are some who propose an issue of gold 
bonds! 

To issue gold bonds would still more appreciate gold. 

To lower the value of gold we must set gold free from 
the restrictions of reserve clauses, and deprive gold of 
its exceptional legal tender privilege. Then we should 
"corner" silver, by the issue of bonds to be given for silver, 
and which could be issued at a premium, perhaps, instead 
of a discount as is the case with gold bonds; about five 
hundred millions would, perhaps, suffice. 

Then we could see more intelligently about a ratio. 
We could, probably, join with France and Russia, and the 
Latin Union and the South American republics in free 
coinage of silver at a ratio of fifteen and one-half to one. 
To make the ratio sixteen to one would only be to repeat 
the stupidity or fraud of 1834. 

If France were to coin at a ratio of fifteen and one- 
half to one, and America were to decide on sixteen to one, 
that would be just t'he same as to say that America would 
not coin silver at all. For the silver would natuarally go 
to where one ounce of gold was given for only fifteen and 
one-half ounces of silver, rather than be sent to the Amer- 



ESSAYS IN POLITICAL ECONOMY. lO/ 

ican mints when the owners would have to give sixteen 
ounces of silver for one ounce of gold. 

We have about $1,954,000,000 in national, state, 
cit}', county, and school bonds. We could consolidate and 
convert that debt and call it ''The United States Funded 
New Threes." Make it then a permanent national debt. 
The future generation can bear it better than this. More- 
over, the sinking fund employed in profitable public works, 
such as canals, harbors, irrigation, railroads in the West 
and South and Northwest, would clearly pay more than 
the interest saved. 

This would give thirty-eight millions a year in reduced 
interest; and about two hundred millions a year by the 
abolition of the sinking fund, no small present relief to an 
overburdened people. 

This would not be against State Rights. It would be 
an affirmation and a confirmation of State Rights. It 
would affirm the right of the several states to derive direct 
benefit from the Union by being able to borrow at the 
lowest rate. 

It has the practical precedents of " Consolidation and 
Conversion" in France and England and the United States 
itself. Then legal tender paper money could be issued for 
all the paper now outstanding, so as to have one uniform 
currenc}/ as legal tender. This to be full legal tender', not 
redeemable legal tender, which is a deliberate deceit. As 
we said, before, convertible paper is not money, nor a sub- 
stitute for money, it is a demand for money, and it must 
be redeemed in money. 

The "United States Funded New Threes" would, then, 
be a permanent basis for the issue of Treasury Legal Tender 
money, to the banks, as called for on the said collateral, 
subject to a graduated tax, and said Treasury Notes to be 
Legal Tender for all debts, without any exception what- 
ever. In this new position, the banks need no longer be 
required to keep any gold reserve whatever, as Treasury 
Notes wouid be full legal tender for deposits, and would 
never run short on account of any financial trouble in 



I08 ESSAYS IN POLITICAL ECONOMY. 

Europe. We would be quite independent of Europe as we 
should be. Our finance would then be "run" on the 
American plan, not on the English plan as heretofore. 

A disturbance in Europe, and the outflow of gold 
would not then require a contraction of credit throughout 
the United States, as at present. At present we cannot 
breath or sneeze, financially, without the gracious per- 
mission of Europe, and there is no more humiliating sen- 
tence uttered in the hearing of Americans, than that we 
see every day in our unpatriotic press, "Europe will not 
buy our securities," if you please. It is America has the 
real wealth, not Europe. 

Then we could let loose the stupid one hundred 
million gold reserve, by building floating forts and fast 
cruisers, for the defence of our defenceless coasts. Then 
we might have a graduated tax on the number of acres, 
held in excess of a fixed maximum allowed to small land- 
owners free of land tax. Then we could coin all our 
silver. Then we could divide the silver equally among the 
states in reduction of taxation; and this help to the West- 
tern and Southern States would make them better custom- 
ers of the Eastern States. Then we could remove the 
"Chinese Wall" and enjoy all the trade of the South 
American Republics. Then we could appoint a National 
Holiday in Thanksgiving for at least some measure of 
justice!!! 

Ah! there is abundant opportunity, in safe and well 
known paths, for enterprising legislation, in declaring war 
against the earth, and compelling it to bring forth fruits in 
abundance, rather than declaring war against a nation and 
murdering hundreds of thousands of our fellow men. Let 
justice in legislation prevail, let religion filter gently 
through all the strata of society. Once more, in fine, let us 
remember that "it is in this as in the Providence which 
governs the world, results do not happen save where all 
the causes cooperate." This is what the church means 
when she says: ' 'Send forth Thy Spirit, O Lord, and Thou 
shalt renew the face of the earth." 

MICHAEL CORCORAN. 

Friday, September ist, 1893. 



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